Technical View: Nifty 50 maintained its upward momentum on January 16. Despite the volatility, the index continued its counter-trend pullback. This movement was supported by gains in banking and financial services as well as oil and gas stocks. The index extended its higher high and higher low pattern for another session. The index broke its recent range by crossing the 23,350 level intraday. This breakout is further increasing the chances of a rally towards 23,500. After this, the probability of rally will increase to 20-day and 200-day exponential moving average (EMA) 23,630-23,680. According to experts, in case of correction, the index may get support around 23,150. Below that the index may get support at 23,050.
Today Nifty closed at 23,312, up 99 points after opening higher at 23,377. Earlier the index reached an intraday high of 23,392 and low of 23,272. However, it formed a bearish candlestick pattern on the daily chart as the closing level remained below the opening level.
How could Nifty move on Friday, January 17?
Jatin Gedia of Mirae Asset Sharekhan said, “The range of the last three trading sessions has been broken on the upside. This indicates that the rally in the index is likely to continue till the levels of 23,500-25,630.”
According to Gedea, the hourly momentum indicator has shown a positive crossover. This is indicating buying. This crossover is suggesting that the counter-trend pullback may continue. He said, if it goes below this, the important support zone in the index is visible at 23,160-23,140.
Monthly options data suggests that Nifty may trade in the range of 23,000-24,000 in the short term. In this, immediate support is seen at 23,000 and resistance at 23,500.
There was strong buying in this IT stock in the dealing rooms today, dealers became bearish in this big stock of insurance sector.
How can Bank Nifty move on Friday, January 17?
Bank Nifty increased its gains for the third consecutive session. The index reached near 49,500 points intraday. The index closed 527 points (1.08 percent) higher at 49,279. This created the Higher Tops-Higher Bottoms formation today. This is indicating short term positivity. Intraday, Bank Nifty touched its 10-day EMA of 49,416. If it sustains above this level, the next target could be 20-day EMA i.e. 50,150.
“Bank Nifty has moved close to the important resistance zone of 49,500-49,600. This is expected to act as an important resistance in the short term,” said Anshul Jain of Lakshmishree Investments.
Jain advised adopting buy-on-dips strategy in the index. The zone of 49,100 has been suggested as the ideal entry point for a possible rise in the index. “Any corrective move with improving sentiments and technical strength should be taken as an opportunity to accumulate. The aim could be to deliver a breakout above the resistance zone,” he advised.
Meanwhile, India VIX, the volatility index, remained in the higher zone at the close. However, it had fallen into the lower zone intraday. It increased by 1.36 percent to the level of 15.47. This level is unfavorable for bulls.
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