Though the momentum looks on the side of the bulls, traders should remain neutral as risk-reward ratios may not be in their favour, say experts.
The bulls have ruled D-Street for the past five trading sessions, pushing the Nifty50 563 points higher while the Sensex has rallied nearly 2,000 points in the same period.
The Nifty50 has gone past its crucial resistance placed at 200-day simple moving average (SMA) as well as the psychologically important 11,000 levels, and on July 21, the index closed above 11,150.
Hopes of coronavirus vaccine and strong global cues helped the bulls to put up a smart show but a mixed trend was seen in the broader market space, signalling caution ahead.
No sell signals were generated on technical charts but momentum could fizzle out before 11,250, say experts. Hence, traders should tread with caution.
“At this juncture, technical oscillators/indicators also providing the mixed picture, with some momentum oscillators on both daily and weekly charts slipping into an overbought zone, whereas laggards like MACD are generating a fresh buy signal on the daily chart,” Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“As the Nifty is staring at a critical near-term resistance point of 11,244 levels, it looks prudent to book profits and remain neutral on the index. If the strength continues beyond 11250, then this rally shall get expanded towards 11,389 levels,” he said.
Though momentum looked in favour of the bulls, traders should remain neutral as risk-reward ratios may not be in their favour, Mohammad said
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We have collated views of experts on what investors should do on Wednesday morning when the market resumes trading:
Expert: Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The Nifty is close to crucial overhead resistance at around 11,250 (opening downside gap of March 6), where, in the past, a sharp downtrend has resumed after the formation of this gap.
The short-term trend continues to be positive and the next upside levels to be watched out for is around 11,250-11,350 and this can be achieved in the short term. The immediate support is placed at 11,050.
Expert: Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas
The Nifty continued its winning streak for a fifth consecutive session. The index is rallying along with the daily upper Bollinger Band, which itself is in an expansion mode.
On the way up, the Nifty is forming runaway gaps on the daily chart. The recent one --11,113-11,037--will act as the near-term support for any minor degree dip. Going ahead, 11,280 will be the key level on the higher side to keep a tab on.
Expert: Ajit Mishra, VP - Research, Religare Broking Ltd
Markets are inching higher with every passing day and the Nifty may face the next hurdle at around 11,250 level.
The up move in the banking index is helping the index to sustain higher levels while others are witnessing rotational buying. Traders should maintain their focus on trade selection and position management.
Expert: Arun Kumar, Market Strategist, Reliance Securities
The Nifty remained positive and gained ground through the trading session. The psychological support has been enhanced to 11,000.
Further, the buy signal on a near-term basis and positive market breadth could see the index move to 11,300-11,500 zone over the next few trading sessions.
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.