Tech View: Nifty ends above 21 EMA. What traders should do on Thursday

economictimes.indiatimes.com:

Nifty ended Wednesday with gains of 735.85 points or 3.36% and settled at 22,620.35 led by strong buying activity across sectors but more prominently in banks and autos. The 50-stock index ended above the downside channel support of 22,200.

Analyst Ashwin Ramani, Derivatives & Technical Analyst at SAMCO Securities said call writers (bears) are exiting with additional PUT writers at all strikes from 21,500 until 22,200, which led to the sharp recovery in Nifty on Wednesday.

«Strong put writing was observed at the 22,200 and 22,400 Strikes in the Index. The call & put writers fought fiercely at the 22,500 Strike and the option activity at this strike will provide cues about Nifty’s intraday direction,» he added.

What should traders do? Here’s what analysts said:

Jatin Gedia, Sharekhan by BNP Paribas

Nifty witnessed a gap up opening and after the initial bout of volatility it stabilized and inched higher to close with gains of 736 points. The Nifty has managed to close above the short-term moving average of 22,514, which is a positive sign. The intraday range of movement has been big and above normal. We expect the range bound action to continue. The range is likely to be 21,300–23,000 from a short-term perspective. India VIX cooled off by 30% and closed around 19.03 on Wednesday and we expect it to cool off further as the uncertainty reduces.

Rupak De, LKP Securities

The Bank Nifty index saw a sharp recovery from its 200-day moving average, closing above its rising trendline and 21-day EMA. This suggests a