Before the RBI interest rate decision, the Nifty defends 18,600 once more, and experts predict that the volatility will soon end.

 

On December 6, as the RBI was about to announce its interest rate decision, the market was dragged down by companies in the information technology, metal, pharma, and auto industries. The Nifty ended the day 0.3 percent lower but managed to hold onto the crucial 18,600 level.

The index rose to an intraday high of 18,655 after beginning 100 points down at 18,601 but then fell and concluded 58 points lower at 18,643.

On the daily charts, it resulted in a bullish candle because the closing price was higher than the opening price. According to experts, the index is likely to break out of its current consolidation shortly and begin moving upward in the direction of previous swing highs, with critical support levels between 18,600 and 18,500.

"On both the hourly and daily charts, a channel analysis reveals that the index has nearly hit the lower end of the rising channel. As a result, there is a good chance that the index will start the second leg of its upward trend at this level. First resistance area is between 18,700 and 18,730, "According to Sharekhan by BNP Paribas's Head of Technical Research, Gaurav Ratnaparkhi.

According to him, the Nifty is anticipated to surpass its most recent high of 18,888 and aim for 19,000 in the near future. The market analyst said that this bullish outlook would change if the index dropped below 18,500 on a closing basis.

Regarding options, the highest Call open interest was still at the 19,000 strike, followed by the 20,000 strike, while the highest Call writing was at the 18,700 strike, followed by the 18,600 and 18,800 strikes.

The largest open interest on the put side was at the 18,000 strike, followed by the 18,500 strike and put writing at the 18,700 strike, followed by the 18,600 & 18,500 strikes.

According to the statistics, the Nifty's short-term trading range will be between 18,500 and 19,000.

The India VIX volatility index increased to 14.04 levels, up 2.25 percent, but experts stated as long as it stays below 20, bulls will likely continue to support the market.

Banking index

The Bank Nifty also slid from 43,094 to 43,076 during the course of the day, remaining under pressure the entire time.

Prior to the RBI policy decision, the banking index finished at 43,139, down 194 points, and created a Doji pattern on the daily charts.

The Doji pattern represents uncertainty among bulls and bears over the direction of the market.

A break on either side post-event may cause some trending swings, according to Kunal Shah, Senior Technical Analyst at LKP Securities, who was referring to the RBI's rate announcement. "The index is locked in a large range between 42,800 and 43,500."

The undertone is still positive, and the level of 42,800 should serve as a strict stop loss if long positions are maintained. According to him, a break over 43,500 will start a quick short-covering rise in the direction of 44,200-44,500 levels.

Disclaimer: Before making any investment decisions based on the preceding material, we urged consumers to consult with recognized specialists.