The Nifty50 largely traded higher throughout the session and closed at a 21-week high on May 15, tracking an uptrend in its global counterparts. The falling inflation and consistent foreign inflows also boosted confidence among market participants.
The index opened higher at 18,339 and gradually extended its northward journey to hit a day's high of 18,459 in the afternoon, though there was a bit of profit-taking in late trade. It finally settled at 18,398.80, the highest closing level since December 19 last year, up 84 points and formed a bullish candlestick pattern with upper and lower wicks on the daily charts.
Considering the momentum, the index is likely to hit 18,500 soon, the next key hurdle, with crucial support at 18,200 levels, experts said.
Momentum indicators RSI (relative strength index) at 71 levels on the daily charts, and MACD (moving average convergence divergence) maintaining positive crossover above the equilibrium line on the weekly scale showed a bullish trend.
All sectoral indices closed in positive terrain with Nifty FMCG being the top gainer with over a percent rally.
"The index is likely to witness a continuation of the positive momentum. The ideal strategy to trade such a kind of scenario is to ride the uptrend with a trailing stop-loss mechanism," Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas said.
On the upside, he expects the Nifty to reach levels of 18,500 and hence he changed outlook on the Nifty to positive from sideways.
“The 18,190 – 18,220 level shall act as a crucial support zone and until this support zone is held, we can expect the dips to be bought into and the positive momentum to continue,” Jatin said.
Option Take
Option data also indicated 18,500 as the next hurdle for the Nifty50, which has maximum Call open interest, followed by 18,400 strike and 18,600 strike, with meaningful Call writing at 18,400 strike, then 18,700 and 18,600 strikes.
On the Put side, 18,300 strike has maximum open interest, which can be immediate support levels for the index, followed by 18,200 strike, with meaningful writing at 18,400 strike, then 18,300 strike.
“The Nifty Index saw large Put writing at the 18,400 PE today post the election results which were more or less factored in already. This was coupled with a large unwinding of the 18,300 Call as well. The Index continues to be in a buy-on-dips strategy with the floor now moving to 18,100 from the 18,000 level,” Rahul Ghose, Founder & CEO at Hedged said.
Bank Nifty
We have also seen strong momentum in Bank Nifty which reclaimed the 44,000 mark after five months and ended at a record closing high of 44,072, up 278.50 points and formed a bullish candlestick pattern on the daily charts making higher highs for the third consecutive session.
“While the ongoing sentiments are quite bullish, it is important to note that prices are currently trading near their all-time high, and therefore, the possibility of a correctional fall cannot be ruled out,” Arvinder Singh Nanda, Senior Vice-President of Master Capital Services said.
He feels the expected support level for such a correctional fall is around 43,750, where a fresh round of buying can be witnessed. “On the higher side, if prices manage to move above 44,152 with a daily closing basis, then the next resistance level will align around 44,500-45,000,” he said.
India VIX, which measures the expected volatility for next thirty days in the Nifty50, increased by 2.48 percent to 13.17 levels from 12.85 levels.
We have also seen the broader markets participating in the uptrend, as the Nifty Midcap 100 and Smallcap 100 indices climbed 0.7 percent and 0.8 percent, respectively.
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