Moneycontrol
Sep 17, 2017 03:56 PM IST | Source: Moneycontrol.com

Why it's only a matter of time before Nifty hits a new high, approaches 10,350

Going ahead, long positions can be taken in pharma, PSU banking and IT counters as they may continue their positive momentum.

Why it's only a matter of time before Nifty hits a new high, approaches 10,350

Jay Purohit 

After a gap down opening on the back of another missile test by North Korea, the Nifty continued the bearish momentum in the first half of Friday’s session.

However, we witnessed a decent recovery in the latter half. The bulls showed some strength from the last few sessions but the Nifty wasn't able to cross its previous high of 10,138.

However, despite the ongoing geopolitical tensions, the Nifty managed to conclude the week at record highs on the weekly closing basis.

In the week gone by, many midcap counters have shown tremendous outperformance and as a result, the Nifty Midcap 50 index made a new ‘all-time high’.

On the sectoral front, the pharma index was the top weekly gainer, followed by decent gains in banking counters.

At the current juncture, Nifty is taking resistance around its previous highs of 10,138 from the last few sessions. The negative implication of a Bearish Harmonic Pattern called ‘Bearish AB=CD’ and the ‘Bearish Engulfing’ pattern formed on weekly chart in last month is still intact and the Bulls need to pull the index above its strong hurdle of 10,150 on a closing basis to negate the same.

In that case, the Nifty will resume its broader uptrend and we won’t be surprised to see 10,300–10,350 levels in the coming weeks.

From the last couple of weeks, we are witnessing a good amount of open interest additions in both Nifty and Bank Nifty. Positions in Nifty were mixed, while the Bank Nifty added a good amount of longs in recent up move, which certainly bodes well for the bulls.

The option activity suggests the highest put concentration at 9,900, which is likely to act as major support for the index. On the other hand, call writing was seen in 10,200 and 10,300 strikes.

The foreign institutional investors (FIIs), who were a net seller in cash market segment worth around Rs 16,000 crore in August, continued to curb liquidity in a current month too as they already sold equities to the tune of Rs 8,000 crore in first ten trading sessions of September.

The market has absorbed the selling pressure from the stronger hands (FIIs) with an ease and is thus showing strength in the near term. Considering the positive placement of technical indicators on the daily chart, it will be a matter of time before the Nifty hits a new high.

Till the time the Nifty sustains above its support zone of 9,965–10,028, traders are advised to trade with a positive bias as we may see 10,300– 10,350 levels on Nifty in the coming weeks.

Going ahead, long positions can be taken in pharma, PSU banking and IT counters as they may continue their positive momentum.

The author is Technical & Derivatives Analyst at Centrum Broking Limited.

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