Technical View: Nifty forms strong bullish candle on weekly & monthly scales, 10,000 crucial

The Nifty50 remained strong for the fourth consecutive day ended April 30 on a seven-week high. Positive global cues, progress in trials of a COVID-19 vaccine, hopes of an easing of lockdown and a stimulus package lifted sentiment. Short covering and rollovers on April expiry also helped the market.

The index signed off the April series with strong signs and formed a bullish candle on daily, weekly and monthly charts, as the closing was higher than the opening. For the week and month, the index gained 7.7 percent and 14.7 percent, respectively.

Given the momentum and positive news developments, experts expect the rally to continue in the coming days and say 10,000 will be a crucial level to watch out for.

The Nifty opened with 200 points gains at 9,753.50 and stayed strong throughout to hit an intraday high of 9,889.05 before closing 306.55 points, or 3.21 percent, higher at 9,859.90, the highest closing since March 11, 2020.

"As long as this index sustains above Thursday's gap zone of 9,731–9,599 levels, the trajectory of this market shall remain higher with initial targets of 9,970 levels and beyond that, a bigger target of 10,159–10,334 can't be ruled out," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.

Moreover, the index appeared to be moving by taking support on the ascending trendline drawn by connecting the recent lows of 7,511 – 8,055 levels; hence any close below the trendline, whose support for next session was placed around 9,545, should be considered the first sign of weakness, he said.

Mohammad advised traders to make use of the dip, if any, between 9,750 –9,700 to create fresh long positions with a stop below 9,600 on a closing basis.

Ajit Mishra, VP-Research, Religare Broking, said markets had gained significant momentum in the last two sessions, which was an encouraging sign and the recent buoyancy in banking space would continue to play a critical role. "We may now see Nifty inching towards the 10,000-mark," Mishra said.

The Nifty Bank also opened strong and rallied nearly 900 points intraday but profit booking at higher levels in the afternoon pulled the index below the opening. The index formed a small-bodied bearish candle, which resembled a Doji pattern on daily charts. The index closed at 21,534.50, up 444.30 points, or 2.11 percent.

For the week and month, the index gained 9.9 percent and 12.5 percent, respectively, which resulted into strong bullish candle formation on the weekly and monthly scales.