Technical View: A day before the monthly F&O expiry on Thursday, December 26, Nifty defended the 200-day EMA (23,700) for another session today on December 24 and saw consolidation. At higher levels, Nifty again faced resistance at 23,900. This suggests that the range of 23,700-23,900 is acting as a consolidation zone for the index. If the index decisively breaks the lower range, the key support level at 23,500 will be the level to watch. However, according to experts, at higher levels, if the index crosses 23,900 then 24,000-24,200 zone will act as resistance.
Nifty touched an intraday high of 23,868 and low of 23,685 before closing at 23,728, down 26 points. The index formed a small bearish candlestick pattern with upper shadow on the daily chart. This is indicating high level of pressure.
How could Nifty move on Thursday 26th December?
According to Nagaraj Shetty of HDFC Securities, today’s formation of a small red candle, following a similar positive candle on Monday, is indicating an inside-day bar-type formation. Generally, the formation of such a pattern after a proper decline is a warning sign of a trend reversal. But it needs to be confirmed. He said a sustained move above 23,900 could confirm a bullish reversal pattern.
According to Shetty, the near-term trend for Nifty is still weak. There are no signs of any significant bottom reversal at lower levels. He said, “The immediate resistance is around 23,900-24,000 levels. On the downside, the next support is seen at 23,500.”
Consolidation seen in the market, experts bet on Bharat Forge, Bata, Jubilant Food and eMudra for short term earnings.
Derivative data also indicates that the 24,000 level is a key resistance for Nifty at higher levels, with support at 23,500.
The market will remain closed on December 25 due to Christmas holiday.
How can Bank Nifty move on Thursday 26th December?
Bank Nifty also traded within last Friday’s range (50,600-51,650). This created an inside bar candlestick pattern on the daily timeframe. The banking index closed at 51,233, down 85 points. The index needs to break this range in either an upward or downward direction to determine its future direction. Experts say that at higher levels, 52,250 is the key resistance. While 50,450 (200-day EMA) is the support level for further upside.
Hrishikesh Yedve, Asit C Mehta Investment Intermediates, said, “In the short term, the index is likely to consolidate in the range of 50,600-51,650. A breakout either above or below this will decide the future direction of Bank Nifty.”
Decreasing volatility is a supportive factor for the bulls for the next session. This increases the chances of an upward move soon. India VIX, the fear index, fell 2.53% to 13.18, adding to a 10.3% decline in the previous session.
(Disclaimer: The views and investment advice expressed on Moneycontrol.com are the personal views and opinions of investment experts. Moneycontrol advises users to consult certified experts before taking any investment decision.)