Tech View: Nifty forms small-bodied candle ahead of US Fed outcome; what should investors do on Thursday?


Bears remained in control of the Nifty50 on Wednesday, pushing the index lower by nearly 100 points, but recovery in the second half of the session helped the index to close above 17,700 levels.

The index made a small-bodied candle on the daily charts ahead of the US Federal Reserve outcome. Indian markets will react on Thursday morning.

Most analysts across the globe are factoring in a rate hike of 75 bps, but escalation of geopolitical tensions could derail momentum, caution experts.

“Markets across the globe were trading with considerable volatility ahead of the Fed policy announcement. A 75 bps hike by Fed was factored in by the markets, while reports of mobilising Russian forces in Ukraine has escalated geopolitical tension and fears of rising inflation,” said Vinod Nair, Head of

Research at

.

The Nifty50 remained volatile in the run-up to the outcome of the US Federal Reserve Policy meeting. The index is likely to face resistance in the range of 17,800-18,000, while on the downside, support is seen near 17,400-17,500.

The Nifty50 index, which opened with a gap down, moved in a volatile way within a wider range of 175 points. It faced some weakness at higher levels but took support near the 5-DMA.

“It formed a small-bodied candle on the daily scale between the broader trading range, indicating decisiveness. Even though buying interest was seen from lows, but the absence of follow-up activity is seen at higher zones,” Chandan

, Vice President, Analyst-Derivatives at Limited, said.

“Now, Nifty50 has to hold near to 17667 zones, for an up move towards 17,850 and 18,000 zones, whereas support exists at 17,550 and 17,442 zones,” he said.

India VIX was up by 2.79% from 18.79 to 19.32 levels. Volatility spiked ahead of global uncertainties and a tug of war between the bulls and bears.

On the options front, the maximum Call OI is at 18,000, which will act as a crucial hurdle, followed by the 18,500 strikes. The maximum Put OI is placed at 17,500, which will act as strong support, followed by 17,000 strikes.

“Options data suggests a broader trading range in between 17,200 to 18,200 zones, while an immediate range in between 17,500 to 18,000 zones,” suggests Taparia.

What should investors do?
The recent price action suggests that the momentum is fading. Although Nifty50 can find buying support at lower levels, a knee-jerk reaction below 17,700 may trigger selling pressure, caution technical experts.

On the daily chart, the index has fallen below the falling trend line suggesting a waning bullishness. “The daily RSI is in a bearish crossover on the daily chart indicating a falling momentum,” Rupak De, Senior Technical Analyst at

, said.

“The trend for the near term may remain sideways to positive as long as the index closes above 17,700. However, a decisive fall below 17,700 may trigger a correction in the market,” he added.

“On the lower end, below 17700, Nifty may fall towards 17,500/17,350. On the higher end, resistance is visible at 17,850-17,900,” recommends De.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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