After the Bell: Sentiment upbeat; here’s how markets may move on Monday

The market continued its upward march for the third consecutive day to close at an over four-month high on July 17 despite weak global cues and concerns of rising coronavirus cases in India and the US.

The Sensex ended the day 548 points, or 1.50 percent, higher at 37,020.14 and Nifty settled with a gain of 162 points, or 1.51 percent, at 10,901.7.

The market gained for the fifth consecutive week as the Sensex and Nifty rose 1.2 percent each for the week. The Nifty Bank, however, snapped the four-week gaining streak, slipping 1.9 percent this week.

"PSU stocks fired up markets as privatisation talks gained ground. Reliance Industries and select financials lent good support to the bulls on a day which saw hectic activity in the broader market. Several rural themed stocks also participated," said S Ranganathan, Head of Research at LKP Securities.

The market gained strength towards the end of the session, led by financials and energy stocks.

Nifty closed above its 200-day moving average despite mixed global cues, backed by a rally across sectors, barring IT. The index closed above 10,900 levels for the first time since March 6 and formed a bullish candle on the daily chart.

But it did not look that strong on the weekly chart as it gained 1.2 percent and formed a Hanging Man kind of pattern on the weekly scale.

Generally, Hanging Man formation is an exhaustion sign, hence technical analysts feel the Nifty has to hold 10,900 levels in the coming sessions to sustain the bullish trend, which can take the index above 11,000 mark.

Market participants told Moneycontrol that as long as the Nifty trades above 10,560 levels, the ongoing rally may continue towards 11,200 levels. A runaway gap is also seen at 11,200 levels and the Nifty may make an attempt to fill the same.

The momentum indicators and oscillators are still in the buy mode on a weekly scale which hints that bulls are tightening the grip.

The volatility index, or VIX, fell by 3.5 percent and ended at 24.15 levels. As long as it trades below 30 levels, the bulls will have the upper hand on the market, a market expert said.

Nagaraj Shetti – Technical & Derivative Analyst, HDFC Securities: A long bull candle was formed on Friday which has overtaken the resistance of previous swing high at 10,900 levels.

The rising wedge type pattern, which was developing in the last three months is still intact and the range of this wedge has been narrowed.

Nifty is now placed at the edge of the upside breakout of the pattern at 10,900-10,950 levels. But, one needs to be careful about false upside breakouts. Normally, rising wedge patterns more often lead to a downside breakout from the highs.

Nifty has witnessed a sharp upside recovery from the lows on the weekly chart and closed near the highs.

Technically, this candle pattern could be considered as a high wave-type formation at the highs. Nifty is currently placed just above the crucial long term resistance around 10,650-10,750 (resistance as per the concept of change in polarity).

The near term uptrend of Nifty seems to have sustained after a small dip and one may expect further upside in the coming sessions.

The next upside levels to be watched around 11,250, which is an opening downside gap of 5th March. Immediate support is placed at 10,850.

However, having stretched its uptrend above the resistance, one needs to be cautious of longs at the highs as there is a possibility of reversal from the highs.

Shrikant Chouhan, Executive Vice President - Equity Technical Research at Kotak Securities On a daily and weekly basis, the market has formed a completely bullish reversal establishment.

The Nifty closed above the starting level of the week which is an indication of short sale covering or fresh buying from traders and investors.

As the market activity was broad-based and across the sectors, we are of the opinion that fresh buying interest has emerged in the market.

In the coming week, the market will reach the minimum side level of 11,050 and we expect the maximum to reach 11,200.

Market support has risen from 10,400 to 10,500. Bank Nifty also returned from 21,000 levels. It could hit the 22,550 or 22,900 level next week.

Financial, metals, auto and pharmaceutical stocks should do a better job.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services We would continue witnessing stock-specific action as the earnings season unfold.

Though the near-term momentum looks positive, we would advise traders to be cautious, given flaring US-China trade relations, a persistent rise in virus cases and implementation of fresh lockdowns in parts of the country.

On the other hand, we would advise investors to continue with their defensive portfolio approach.

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.