After The Bell: Sensex back above 40,000 levels; what should investors do on Friday?

“Technically, the Nifty trading above 11,794 indicates a bullish signal for the market and exhibits strength for the index to rally beyond 12,000 levels. However, with the market being overstretched in the short term, a minor correction can’t be ruled out,” he said.

Chauhan added that any dip would be an opportunity for investors to create long positions between 11,700 and 11,650 levels. "One needs to keep a stop-loss at 11,500 for the same. On October 9, the market would like to take a cue from the monetary policy announcement."

Here is what experts have to say on what investors should do on October 9:

Nagaraj Shetti, Technical Research Analyst, HDFC Securities: Thursday's (October 7) up move and the formation of a new swing high seem to have negated the previous reversal pattern of bearish engulfing (later Aug 20) as per daily and weekly timeframe chart, as Nifty closed above 11,794 on Thursday. If Nifty closes above 11,850 by Friday (October 9), then one may consider such action as a bullish pattern and more upside could open.

Though Nifty moved up consistently in the last four-to-five sessions, the overall market breadth was not in line with the benchmark index. The broad market indices like midcap and smallcap segments have failed to show any meaningful gains.

The short term trend of Nifty continues to be positive. The formation of Doji pattern, development of negative divergence, and deteriorating market breadth at highs are all indicating a possibility of profit booking from the highs.

A confirmation by the way of reasonable weakness is likely to change the trend. The next overhead resistance to be watched at 12,000 levels and immediate support is placed at 11,740.

Sumeet Bagadia, Executive Director at Choice Broking: After a gap-up opening, Nifty further went up but sharply corrected in the second half due to weakness encountered in IT counters in dying hours.

Technically, Nifty has formed Doji Candlestick formation which is an indecisive candle and doesn’t show any particular move for an upcoming trading session. At present, Nifty has strong support at 11,760 to 11,620 while upside resistance comes at 12,000 levels.

Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in: Sooner than later Nifty shall undergo a corrective downswing which can be kicked in if the index closes below 11790 in the next trading session. In case, as upside momentum is very strong, if bulls manage to pull the indices beyond 11,905 levels then the ideal target on the upside shall be close to 12,000 levels.

Considering the volatile nature of markets with mixed technical signals on charts it looks prudent on the part of traders to remain neutral till weakness in the index is confirmed.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas: As the index has been rallying for the last several sessions, a brief consolidation cannot be ruled out. The broader market indices have been witnessing a sideways action for the last few days & that space can continue to see relative weakness.

In the case of Nifty, the overall short term targets on the upside will be 12,000-12,130. On the other hand, 11,700-11,650 will act as a near term support zone.

Arjun Mahajan, Head - Institutional Business at Reliance Securities: Nifty continued to gain for the sixth consecutive days mainly supported by positive global cues and a sharp rebound in IT stocks after TCS reported strong Q2 performance.

The market corrected significantly from today's top as profit booking was very much visible at a higher level. MPC meeting outcome tomorrow will be crucial for markets to sustain the current rally.

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.