Technical View: Festive cheer pulls Nifty to fresh record highs; next target placed at 10,650

The bulls charged on D-Street from the word go on the first day of Diwali week and it looks like we are staring at record highs on the Diwali day. The Nifty made a bullish candle for the third consecutive day in a row on Monday.

The Nifty made a new record high as it broke out of trading range with buying across segments. The Nifty managed to close above 10,200 mark after two and a half months.

The recent breakout on the index opened fresh target towards 10,650 and investors who are long should keep a trailing stop loss below 10,100 from 10,000 earlier.

The Nifty opened at 10,207 and slipped marginally to hit its intraday low of 10,175.10. It rose to a record high of 10,242.95 before closing the day 63 points higher at 10,230.85.

“The Nifty50 appears to have decisively broken out of its 3-month old channel which has opened up a new target placed around 10,650 levels. Monday’s intraday price behaviour is quite encouraging as intraday dips from new highs were bought into by the bulls thereby giving more credence to buy on dips strategy,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“However, negative advance-decline ratio and lack of contribution from Bank Nifty is pointing towards narrower participation in this leg of new highs,” he said.

Mohammad further added that despite few negative signs trade continues to remain on the long side as momentum is quite strong in that direction. Traders are advised to hold long positions with a stop below 10,100 on a closing basis, he said.

Buying was seen across sectors. The momentum was led by metals and banking stocks. IT sector is also looking promising with bluechips like TCS, Infosys gaining momentum.

Strikes which are seeing a lot of writing and may act as support are 10,100 and 10,000. These further indicates the present support in momentum lies at very closest strike prices.

“Any dip towards these strikes will augment bulls to enter in momentum for further upside. This may be one-way street and resistance comes only at 10,400 which is an extension of previous swing points,” Mustafa Nadeem, CEO, Epic Research told Moneycontrol.

“Nifty makes a new record as it breaks out of trading range with buying. It formed a bullish candlestick pattern with breakout is seen as signs of bullish momentum,” he said.