17,500 level will act as key support for January expiry

The Benchmark Index rebounded after a day of profit booking but remains well within a range-bound session as volatility and range contracts after an expansion which we have seen over the last two weeks. The rebound from 16,400 for the benchmark has been phenomenal questioning the very existence of bears in a secular bullish run we have seen. The benchmark has been able to clear 0.50 and 0.618 key fib resistance levels placed at 17,500 and 17,760. The key resistance or to say it precisely the confluence of resistance zone is placed between 18,000 – 18,150 on the higher side where we have seen some distribution in November second half as the market took a sharp hit from the same levels.

As per OI data, we believe 17,500 will act as key support for January expiry and a breach of this would push Index into a continued bearish bias. A breach of 18,150 – 18,180 levels will trigger a fresh long along with some momentum on the upside towards an all-time high. Nifty Bank has key resistance placed at 0.50 Fib levels at 37,953.85 and 0.61 at 38,861. A breach of 37,953 on closing should clear the path of least resistance towards 38860 for bulls.

In a Key Insight, We do believe there is a breakout as per a Momentum Breakout reading when the Nifty50 universe is analysed. The last signal we have seen of similar reading is in August 2021 when the market moved from 16,200 to 18,200, November 2020 where we have seen it rally from 12,600 to 14,900 and some more events in past. There have been only 6 instances where we have seen reading such signals from 2016 and the market has on average reacted well in favour of bulls. For now, bulls should utilise this and keep the dips being utilised in their favour.