Nifty 50 forms a Doji-like candlestick pattern, indicates indecision among buyers and sellers

The Nifty 50 ended a lackluster session on a positive note, rising by 0.4% on January 14. As anticipated, the index moved closer to the 23,200-23,300 range due to oversold conditions, indicated by the momentum indicator (RSI). However, it failed to maintain these levels, closing with a Doji-like candlestick pattern, suggesting indecision between buyers and sellers. For a sustained recovery, the Nifty must fill the gap created on January 13 by surpassing 23,350. Without this, the consolidation and bearish phase could continue, with a downside target of 23,000. If the index manages to break above this level and hold, the 23,500-23,600 range would be the next resistance zone, experts suggest.

The Nifty 50 opened at 23,166 and remained in positive territory throughout the session, supported by short-covering and some value buying. It finished at 23,176, up 90 points.

Despite this bounce, the negative chart pattern of lower tops and bottoms remains intact, signaling a potential formation of another lower top in the near term. Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, believes the near-term trend remains weak, with the current upside bounce presenting a potential sell-on-rise opportunity around 23,350. Immediate support is seen at 23,050.

The weekly derivative data shows that the 24,000 strike has the highest call open interest, followed by 23,500 and 23,400 strikes, with the maximum call writing at 23,200, 23,400, and 23,500. On the put side, the 23,000 strike holds the highest open interest, followed by 22,500 and 23,200, with maximum writing at 23,200, 22,500, and 22,400.

The options data suggests that the Nifty may remain in a range between 23,000 and 24,000. A decisive break in either direction could provide the index with a clear trend.

Bank Nifty

The Bank Nifty, already in oversold conditions, bounced back strongly with a 688-point (1.43%) gain, closing at 48,729 and briefly hitting the 49,000 mark. The index formed a bullish candlestick pattern with a small upper shadow and needs to hold above 49,000 to continue its upward move. Immediate support is expected at 47,900, the low of January 13.

The banking index ended its eight-session streak of lower highs, offering some relief after a sharp corrective move of around 3,500 points. Chandan Taparia, Senior Vice President and Head of Technical Research and Derivatives at Motilal Oswal Financial Services, suggested that the Bank Nifty must hold above the 48,500 zone for a rally toward 49,000 and then 49,500. A failure to do so could result in weakness towards 48,250 and 48,000.

Meanwhile, the India VIX, a measure of market volatility, dropped 3.3% to 15.47. However, it remains well above the 14 mark, signaling continued caution among bulls.