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The Indian stock market, specifically the Nifty 50 and Bank Nifty indices, experienced significant volatility and subsequent recovery on December 13th. The Nifty 50 index, after initially dropping below key moving averages to a low of 24,181, staged a remarkable rebound, surpassing the immediate resistance levels of 24,700-24,750. This recovery closed the day at 24,768, forming a bullish candlestick pattern indicative of strong buying pressure at lower price points. The continued upward movement hinges critically on sustaining above the 24,700 mark. Failure to maintain this level could signal renewed downward pressure, with potential support at the 24,500-24,400 range. The success of this recovery is particularly noteworthy given the previous five-day consolidation within a narrower range. Experts suggest that exceeding 24,858 (the previous week's high) would pave the way for a move towards the 25,000-25,100 zone, a level representing significant resistance. The weekly timeframe paints a similar picture, showcasing a fourth consecutive week of uptrend with a modest 0.4% gain. The Inside Bar pattern formed on the weekly chart highlights the importance of the previous week’s high (24,858) and low (24,009) as crucial levels to watch in the coming week. This reinforces the notion that a decisive break above the 24,700 mark is vital for continued bullish momentum.
Derivative market data offers further insights into the market sentiment. Call options show maximum open interest at the 25,000 strike price, followed by 25,500 and 25,100. Conversely, maximum writing is observed at the 25,100 strike, followed by 24,800 and 25,000. On the put side, the maximum open interest rests at the 24,500 strike price, with subsequent concentrations at 24,400 and 24,700. This mirrors the writing activity, further emphasizing the 24,500 level's significance. The weekly options data and Put-Call Ratio (PCR) provide further support to the bullish outlook. The PCR improved to 1.04, indicating a strengthening bullish sentiment, and the convergence of technical analysis and derivative data points towards a continuation of the positive market momentum. Jatin Gedia from Mirae Asset Sharekhan projects a continued upward trajectory towards 25,125, highlighting the 24,420-24,400 range as a critical support zone. The analysis emphasizes that while the short-term outlook is bullish, the 24,700 support level remains crucial for maintaining the upward trend.
The Bank Nifty index followed a similar trajectory, exhibiting a robust recovery from its daily low. The index closed at 53,584, a gain of 367 points, also displaying a bullish candlestick pattern with a long lower shadow. This pattern is echoed in the nearly 1,400 point recovery from its intraday trough. Similar to the Nifty, the Bank Nifty formed an Inside Bar pattern on the weekly chart, signaling the previous week's high (53,888) and low (51,694) as key levels for the upcoming week. Amol Athawale from Kotak Securities, while also noting a short-term bullish formation, identifies key support zones at 53,000 and 52,800, with resistance levels anticipated at 54,000-54,300. The convergence of these analyses, from both Nifty and Bank Nifty perspectives, reinforces the overall bullish market sentiment. Furthermore, a significant drop in volatility, continuing for six consecutive sessions and reaching a two-month low, adds confidence for market bulls. The India VIX, a measure of market fear, declined by 1.04% to 13.05, showcasing a further 7.69% decrease for the week. This significant reduction in volatility contributes significantly to the positive outlook for the upcoming trading period. Overall, the technical analysis presented, supported by derivative data and declining volatility, paints a picture of continued bullish momentum in the Indian stock market, contingent upon the continued support of the crucial 24,700 level for the Nifty 50 index.
Source: Technical View: Holding 24,700 crucial for Nifty to see upward journey; VIX at 2-month low