The Nifty50 continued its strong uptrend for a second consecutive session and closed above its 50-DEMA at 11,173 on September 28 on hopes of another stimulus package from the government to shore up the economy.
After opening strong at 11,140.85, the index extended gains to touch the day’s high of 11,239.35. The index closed at 11,227.50, up 177.20 points or 1.60 percent.
Positive global cues and buying across sectors pushed the index higher. It formed a bullish candle on the daily charts.
Experts say 11,300 is a crucial level to watch, as a decisive close above the mark can fuel a further rally, experts said.
In the next session, traders should make use of any correction, due to profit booking, as a buying opportunity in the 11,160–11,127 zone with a stop below 11,070 on a closing basis, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
India VIX fell by 5.36 percent from 20.68 to 19.57 levels, which will give some comfort for a bounce-back move.
"As of now, the current leg of upswing from the recent lows of 10,790 shall still be construed as a counter-trend rally and hence the index may witness profit-booking around its 50-day simple moving average whose value is present around 11,300 levels," Mohammad said.
The hurdle of 11,300 also coincided with the 62 percent retracement level of the last leg of fall from the interim top of 11,618–10,790 levels, he said.
If the bulls manage a strong close above 11,300, then the upswing shall get expanded towards 11,410, Mohammad said.
For the time, the support on the downside can be expected in the bullish gap zone of 11,099–11,072 registered on September 28, he said.
On the option front, maximum Put open interest was at 10,500 followed by 11,000 strike, while maximum Call open interest was at 11,500 followed by 12,000 strike. Marginal Call writing was seen in 11,500 and 11,300 strike while Put writing was seen at 11,000 then 10,800 strike.
The options data suggests a wider trading range for the Nifty at 10,700 to 11,500 while the immediate trading range would be 11,000-11,400.
The Bank Nifty continued its positive momentum second session in a row. The index closed 683.15 points or 3.26 percent higher at 21,665.50, outperforming the benchmark Nifty50 and formed a bullish candle on the daily charts.
"Now it needs to hold above 21,500 levels for a bounce towards 22,222 while on the downside, key support is seen at 21,000," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Positive setup was seen in Escorts, Balkrishna Industries, TVS Motor, Axis Bank, Biocon, Cholamandalam Finance, MFSL, Page Industries, Jubilant Foodworks, ICICI Bank, Havells and Grasim while no major weakness was seen in any of F&O counter during the session, he added.