Nifty rallied more than 400 points to register record closing high making a strong bullish candle for the third consecutive day on the daily candlestick charts on May 20.
The Supertrend indicator and MACD have given a bullish crossover that suggests that bulls likely to dictate short term trend on D-Street. The index is just 28 points away from its all-time high of 11,856 recorded in April.
Nifty is now trading above most of its short term moving averages. Most experts feel that after a sharp rally, there is a high possibility of some consolidation till May 23.
Final results will dictate the near term trend for the markets. Traders who went long on the index should consider booking profits on their long positions, suggest experts.
Nifty opened at 11,651 and rose to an intraday high of 11,845. It witnessed some profit booking at higher levels and closed at 11,828, up 421 points from its previous close of 11,407.
“Usually after this kind of performance normalcy should return to the markets and hence next two sessions can witness muted response as bulls may try to consolidate their gains with a sideways range,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Hence, the fortunate traders who happened to be on the long side of the trade can consider booking profits by making use of strong opening in the next session. If the strength on Nifty50 exceeds beyond 11,856 on closing basis then the rally should ideally get extended up to 12,100,” he said.
Mohammad further added that on the downsides strong support can be expected around 11,720 where fresh buying can be considered with a stop below 11,590 on closing basis.
India VIX fell down sharply by 16.13 percent during the session after hitting 29.33. A sharp decline in VIX has given comfort to bulls with stability into the market, suggest experts.
Nifty options: Maximum Put OI was placed at 11,000 followed by 11,500 while maximum Call OI was at 12,000 followed by 12,500.
Call writing was seen at 12,200 followed by 12,300 while Put writing was seen at 11,500. Options band signifies a wider trading range of 11,550-12,000.
“Nifty opened gap up post the positive outcome of election exit poll and rallied more than 400 points to enter near to its lifetime high territory. It managed to cross its crucial hurdle of 11,550 and headed towards 11,850 by registering a recent highest daily close in last many years,” Chandan Taparia, derivative & technical analyst at Motilal Oswal Securities told Moneycontrol.
“The index has been forming higher lows from last four trading sessions and momentum could continue till it holds above previous day’s low levels. Now it has to continue to hold above 11,666 to extend its move towards 12,000; while major support exists at 11,550,” he said.