The Nifty50 bulls successfully surpassed the 25,200-25,250 resistance zone, as well as the 78.6 percent retracement of the September high-low, rising by more than 100 points on October 10. This rally was primarily driven by the banking sector, which has been leading the current market momentum. Given the healthy technicals and momentum indicators, the index appears poised for further upward movement towards the 25,450-25,500 zone, a key hurdle from September. However, experts expect 25,100-25,000 to serve as a strong support zone.
The Nifty50 opened flat but gained momentum swiftly, extending its uptrend throughout the day despite some volatility. The index reached an intraday high of 25,331 in the second half of the session before closing at 25,285, up 104 points (0.41 percent). The formation of a bullish candle with a minor upper shadow on the daily charts indicates a positive trend, despite some profit-taking at higher levels.
The index, already trading well above all major moving averages, found additional support from momentum indicators. The RSI climbed above the 60 zone to 60.99, while the MACD maintained its bullish crossover, with the histogram showing further strength.
The ongoing uptrend signals a continuation pattern, characterized by higher tops and bottoms. On the weekly chart, the index gained 1.6 percent and formed a long bullish candle that nearly engulfed the upper portion of the large bearish candle from the end of September, establishing a higher high-low structure.
Therefore, according to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the market's underlying trend remains positive.
"The Nifty is expected to continue its upward move toward the important resistance levels of around 25,400-25,450 by next week. Immediate support is placed at 25,150," he said.
Weekly derivative data suggests that the Nifty50 is likely to face resistance in the 25,400-25,500 range, with support in the 25,200-25,000 zone.
The maximum open interest for Call options was at the 25,500 strike, followed by the 25,400 and 25,300 strikes. The maximum Call writing was seen at the 25,450, 25,350, and 25,400 strikes. For Put options, the maximum open interest was at the 25,200 strike, followed by the 25,000 and 25,100 strikes, with the maximum Put writing seen at the 25,300, 25,250, and 25,200 strikes.
Bank Nifty
The Bank Nifty outperformed the Nifty50, rising by 418 points (0.74 percent) to 56,610, and hitting the 78.6 percent retracement of the July high to the September low on an intraday basis (56,760). If the index clears Friday's high in the upcoming week, immediate hurdles are seen at 57,300 and 57,630 (record high). A breakout above these levels would propel the index into uncharted territory.
On Friday’s close, the index formed a long bullish candle with a higher high-higher low structure and broke above the downward-sloping trendline on the weekly chart, suggesting a potential shift from a brief consolidation phase to a bullish continuation phase. For the week, the index gained 1.84 percent.
Following this structural change, the prior swing high of 55,830-55,850 acted as strong support, allowing the index to maintain its upward momentum.
The RSI, nearing the 70 mark and showing an upward trajectory, indicates healthy momentum. Additionally, the price closing above the upper Bollinger Band suggests strong buying pressure, which could lead to further continuation of the uptrend in the near term.
"If the index manages to follow through above the 57,000 level, the pullback could extend towards the 57,600 level," said Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities.
Both PSU and private banks contributed to the rally, with the Nifty PSU Bank index gaining 1.5 percent, and the Nifty Private Bank index jumping 2.2 percent.
Meanwhile, the India VIX, which measures market volatility, remained in a lower range, keeping the bulls comfortable. The index rose by 0.42 percent to 10.10 on Friday.
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