After the Bell: Here what should investors do on Tuesday

John Maynard Keynes once said, “The markets can remain irrational longer than you can remain solvent.” Well, if you were waiting on the sidelines hoping to enter the market on a dip because of rising coronavirus cases, deteriorating fundamentals, or muted earnings, the ship has already sailed now.

The Nifty rallied to 11,000 as on July 20 from 10,000 levels recorded on June 3 in a little over 30 trading sessions. The index has surged over 45 percent from its swing low of 7,500 recorded on March 24.

The next big question is where is the index headed and should one enter at current levels? Well, the momentum is still intact, although marginal profit taking has been seen at higher levels, but the downside remains limited.

Analysts advise caution, or booking partial profits, if you are already long because the Nifty will be faced with multiple resistance levels on the upside. The long term trend has turned positive and profit booking at higher levels cannot be ruled out.

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities, said previously whenever the Nifty crossed the 11,000 mark, 11,100 acted as a trend decision level for the market. "Since January 2018, the Nifty has taken a pause multiple times around 11,100 levels. We need to be careful while adding long positions around it. Support exists at 10,950 and 10,850."

We have collated views from various experts as to what investors should do on Tuesday morning when the market will resume trading:

The momentum is in favour of bulls one should only remain optimistic and look for higher targets placed around 11,250 levels unless Nifty registers a close below 10,867 levels, which may bring back bears once again.

In case Nifty manages to close above 11,250 levels then the rally shall ideally extend into the bearish gap zone of 11,384-11,536 levels registered on the February 28.

The Nifty is moving towards a crucial upside zone of opening downside gap resistance at 11,250. This gap was formed in March 6 and the sharp weakness has resumed in Nifty after the formation of this opening down gap.

Hence, this important event gap could be filled shortly and the area of 11,250 is expected to be strong resistance on the way ahead. Even one may expect reversal around this resistance zone.

The long term charts like weekly and monthly timeframe indicate a stretched upside momentum in the market and they signal chances of a sharp turnaround in Nifty from the higher levels. Hence, one needs to be cautious of long positions at the highs.

The short term trend of Nifty continues to be positive. One may ride the uptrend and continue long trading positions with the stop loss of 10,900 levels. The next crucial resistance to be watched around 11250 in this week. Key support is placed around 10,900-10,850 levels.

On July 20, the Nifty witnessed the continuation of the strong momentum from the last week. As a result, Nifty opened the gap up and scaled above 11,000 mark on a closing basis.

The index formed a small bullish flag pattern on the intraday chart and broke out on the upside towards the end of the session. Going ahead, 20 months moving average i.e. 11,090 will be the key hurdle to watch out for.

Overall, the Nifty is set to test its weekly upper Bollinger Band, which is near 11,280. On the flip side, 10,950-10,930 will act as a near term support zone for any minor degree dip.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.