Technical View: Finally, a breakout! All eyes on 5-digit figure of 10,000 on Nifty

The Nifty50 which rose to a record high of 9,782.15 witnessed some bit of volatility as NSE remained shut for almost 3 hours on account of technical glitch on Monday.

The index broke above previous record high of 9,709 and made a strong bullish candle on charts which now opens the deck for 10,000 levels on the Nifty in the short term.

The Nifty50 which opened at 9,719.30 rose to a record high of 9,782.15. It slipped to 9,646.45 before closing at 9,771.05, up 105.25 points.

The Bulls finally took charge of D-Street and now a hold above 9,700 would take the index towards new highs of 9,800-10,000, suggest experts. However, there is one thing which does not convince traders and that is volumes which remained lackluster despite a big move in the index.

The index continued its formation of higher lows for sixth consecutive sessions and till this formation doesn’t negate market is likely to cherish the bullish sentiment.

The Nifty50 registered a decisive breakout above 9,709 levels after 4 weeks of corrective consolidation phase with a solid intraday gain of above 100 points after a long time. On the downside, the index has a strong support placed around 9,600-9,650.

“It seems with this breakout, decks are cleared for it to test the magical 5 digit figure of 10, 000 levels in this upswing. However, in between a resistance can be expected around 9828 levels as indices move towards that area,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.

“But, as of now traders can move ahead with long positions with a stop below 9700 on a closing basis and any pull back can be used to create fresh long positions,” he said.

On the options front, maximum Put OI shifted to 9600 followed by 9500 strikes while maximum Call OI also shifted to 9800 followed by 9700 strikes.

Fresh Put writing was seen at 9700 and 9600 strikes which are supporting this breakout and suggesting an extension of this up move. Put Call Ratio based on Open Interest of Nifty has moved higher thus suggesting a tight grip of bulls and option put writers.

“We have also noticed Call unwinding in 9500, 9600 and 9700 strikes while fresh Call writing is taking place at 9800, 9850 and 9900 strikes,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“The Nifty index formed a strong Bullish candle on the Daily chart and given the breakout from its right angle triangle pattern. The index closed with the decent gains of more than 100 points even after the technical issue at NSE platform,” he said.

Taparia further added that it has to continue to hold above 9,700 zones to extend its up move towards 9850 and higher levels while on the downside supports are seen at 9650 mark.