Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After witnessing a massive sell off during later part of Tuesday's trade, the Nifty witnessed a sustainable upside bounce on Wednesday and closed the day higher by 177 points. After opening with an upside gap of 87 points (body gap, not a western gap), the market showed range movement with positive bias that continued for the whole session. The opening upside gap remains unfilled and the Nifty closed at the days high.
A reasonable positive candle was formed on the daily chart with minor upper and lower shadow. The positive candle pattern of Wednesday is placed with in a high low range of long negative candle of Tuesday. Technically, this pattern indicate a formation of inside bar type formation and this could raise hopes for a pull back rally in the market.
The crucial lower area of 17000-16800 levels seems to be acting as an important value area. The current chart pattern indicate that Nifty seems to have halted its decline around this support and could bounce back. Previously, the upside and downside movement from this area has gathered sharp momentum on either side. Hence, a sustainable move above 17300 levels is likely to bring bulls back into action.
Conclusion: The relief rally of Wednesday post sharp weakness of previous session could be a cheering factor for the bulls to make a comeback. A decisive move above 17300 levels is likely to confirm a reversal pattern post higher bottom at 16825 levels and that could possibly pull Nifty towards further upside. Immediate support is placed at 17000 levels.