Technical View: Nifty forms bullish candle, book profits if index fails to hold 10,328

The Nifty50 picked up momentum in late morning deals and extended the rally to close above the 10,200-mark on June 19, largely driven by Reliance Industries and rate-sensitive stocks.

Positive global cues also lifted sentiment but investors continued to keep a watch on rising coronavirus infections and India-China tensions.

The index settled well above the 100-day simple moving average, placed at 10,094, and formed a bullish candle on daily as well as weekly scales, as the closing was higher than opening levels. It gained 2.7 percent for the week.

Given the momentum, experts say the index can march towards the recent swing high of 10,328.

For the time being, positional traders to consider booking profits in the next session if the Nifty fails to close above 10,328, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.

The Nifty50 opened higher at 10,119 and turned volatile to slip to the day's low of 10,072.65 but gained momentum in late morning deals and extended upside to touch an intraday high of 10,272.40 before signing off the session at 10,244.40, up 152.70 points or 1.51 percent.

"The bulls appear to be solidifying their position as the Nifty smartly recoiled from the intra-week low of 9,726 levels, which depicted a decent bullish candle on the weekly charts. With Friday's follow-through price action, the Nifty overcame one more hurdle in the form of the 100-day simple moving average," Mohammad said.

Hence, if the index sustains above the day’s low of 10,072, then it shall head to test swing high of 10,328 registered on June 8, he said.

If the Nifty makes a fresh breakout above 10,328, then the bulls will head to challenge the 200-day moving average, the value of which is placed at around 10,917, but it can meet some resistance in the 10,751–10,827 zone.

If the Nifty fails to hold above 10,072 on a closing basis in the next session, then can undergo some minor consolidation, Mohammad said.

Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments, also said, the index is on its way to achieving 10,300 and then 10,500. "We could expect these targets as early as next week," he said.

The Bank Nifty also witnessed volatility but remained in positive terrain for most of the day and closed well above the 21,000-mark.

The index touched an intraday high of 21,467.65 and a low of 20,878.25, before closing at 21,338.10, with gains of 381.80 points, or 1.82 percent, and formed a bullish candle on the daily charts.

The index rallied 3.3 percent for the week and also formed a bullish candle on the weekly scale.

Among other sectors, Nifty Auto and Financial Service indices gained 1.5 percent each, while Realty was up over 6 percent.

The broader markets also traded largely in line with the benchmarks. The Nifty Midcap index was up nearly 1 percent and smallcap gained 1.86 percent.