Is it the mother of all bull markets as Nifty nears 21,500 with 14% gains since October lows?

The rally is just in its middle phase of upward trajectory

By Ashish Kyal, CMT, Founder & CEO of Waves Strategy Advisors

The Nifty had another strong day on December 15 with prices continuing to move in unchartered territory and hitting lifetime high levels of 21,492 on the upside. The index rallied 14 percent from October lows.

The major contribution on Friday was from IT sector and stocks like Infosys, TCS, HCL Technologies were up by more than 5 percent. It is rare to see such heavyweights from IT driving the rally but as we mentioned multiple times earlier as well IT sector is just coming out of long term corrective phase and will lead the rally this time on upside.

In the ongoing up move, it is best to avoid catching a top and one should use dips as buying opportunity. This is the mother of all bull markets and the rally is just in its middle phase of upward trajectory.

Buying momentum stocks and riding it all the way higher is the best way to make most of this rally. Also, options trader can use dips to the important price action support areas to re-enter the trend. The support now is at 21,100 – 21,200 levels.

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Ashish Kyal

Founder|Waves Strategy Advisors - wavesstrategy.com

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Nifty hourly chart

From Elliott wave perspective, the Nifty is currently in wave v of (iii) and there is more room on upside towards Gann level of 21,683 post which we can start seeing consolidation or correction towards 21,250 levels before resuming higher beyond 22,000 in form of wave (v).

Also read: Sensex, Nifty, Bank Nifty march to record highs; Q3 results next big trigger

Nifty open interest profile –

Nifty open interest profile chart is shown above. The left hand side green colour represents build up on Call side open interest and right hand side shows Put open interest. We can see that sharp rise is at 21,300 Put options and 21,500 Call option sellers can panic if prices sustain above 21,540 levels. In this entire up move, Call option sellers have been failing the brunt of strong upside trend.

In a nutshell, Nifty trend is positive and it is best to avoid a top here unless we see close below prior candle low. Keep riding the overall trend on upside as this is “Mother of all Bull markets” with immediate support near 21,180 levels and aiming for target of Gann near 21,683.

Also read: Stocks with ‘hockey-stick returns’: SRF, Tata Elxsi among top names in 10 years, says Motilal Oswal

Bank Nifty hourly Chart

Bank Nifty reached new milestone by surpassing 48,000 mark for the first time. Sentiments remained positive following the dovish stance taken by the US Federal Reserve. Towards the end prices closed with a gain of 0.86 percent above 48,000 mark at 48,143 levels.

Bank Nifty closed above previous day’s high which is positive signal. So, as long as we do not see a close below previous day’s low which is at 47,510 overall tone is likely to remain positive. Prices have channel resistance which is near 48,950.

On the hourly chart, the entire rise is in form of wave (v) of 3 and there is still room left on upside.

In short, trend for Bank Nifty is ullish. Buy on dips approach is advisable to ride the trend with the targets of 48,450 followed by 48,950 as long as 47,510 holds on the downside.

CNX IT

CNX IT index is gaining momentum and was up by more than 7 percent in the previous week. We have been bullish on IT sector over past few months which has paid out well in terms of performance. Momentum can pick up further in this sector.

We can clearly see strong breakout in this sector above the upward sloping channel and the momentum has just picked up. On upside, we can expect the sector to head towards 38,000 and possibly higher levels. In my earlier interviews with Moneycontrol have mentioned bullish stand on IT index when it was just near 31,000 levels and now prices are inching to 36,000.

Follow Ashish Kyal on Twitter - @kyalashish

Disclaimer: The views and investment tips expressed by investment 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.