The index gained strength in the second half of the trading session on Friday and ended marginally on a positive note this week; driven by hope of more steps from the government to boost growth. Nifty covered its previous day’s losses to close above 11050 and formed a bullish candle on daily as well as on weekly charts, indicating strength in the market.
Nifty Midcap and Small cap index witnessed Inverted Head & Shoulder breakout and the investors were leaning towards mid caps and small caps stocks in a four session trading week.
In the Hourly chart, Nifty bounced from the convergence of 38.2% Fib retracement, 50 and 100 hourly SMA. The index closed right below the upper line of the Symmetrical triangle pattern (11100) which is likely to act as a short term resistance.
Probable support in the near term comes at 10970 which is the convergence of 50, 100 and 200 Hourly SMA. Technical parameters look bullish as of now in the hourly chart as most technical parameters are trading in or very close to the overbought area.
The index closed right below the daily resistance zone of 11085-11150 which is likely to act as a crucial resistance in the short term. The option chain of 13th September however showed bullish outlook where positions were being added on the put side along with shredding of Open Interest on the call side which suggest strength in the index.
As per the option chain analysis, highest build-up on the put side comes at 10900 and 11000 which is likely to act as a crucial support and highest build-up on the call side comes at 11100 and 11200 which is likely to act as a crucial resistance in the coming days. Moreover, the total Open Interest on the put side as on Friday stands at 13,325,325 as compared to 9,167,475 on the Call side suggesting strength as of now.
Nifty too forming Inverted Head & Shoulder in the daily chart where neckline breakout is above 11150. However another important resistance post breakout comes at 11205-11225 which is the convergence of 38.2% Fib retracement, 50 & 200 Day SMA; sustainable close above which may lead to confirmed breakout in the index. Technical parameters look neutral to bullish as of now in the daily chart.
In the weekly chart, Nifty consolidating in a narrow range in an Inside Bar pattern since last three weeks and breakout on the upside comes at 11147.
Probable resistance comes at 50 weekly MA at 11115 and probable support comes at 100 weekly MA at 10910 on a weekly closing basis. Technical parameters still haven’t turned bullish in the weekly chart yet due to consolidation since last six weeks.