The Nifty had a strong run-up for the second consecutive session and closed above the crucial resistance level of 14,600 on April 27 despite consistent FII selling, forming a bullish candle on the daily charts. Banking & financials and metals continued to be the leaders.
The formation of a bullish candle indicates that the closing was higher than the opening level. The index can march towards 14,800 in the coming sessions, say experts.
Traders should refrain from shorting but long side trade can be considered on a dip towards 14,590 for a target of 14,790, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
The Nifty opened higher at 14,493.80 and extended gains to hit the day's high of 14,667.55 in late trade. The index settled at 14,653, up 168 points or 1.16 percent.
"Bulls appear to be slowly strengthening their grip on the markets as the Nifty conquered the near-term resistance with a close above its 20-day exponential moving average whose value is placed around 14,575 levels. Hence, as long as it sustains above 14,484 levels, it can slowly head to test its 50-day simple moving average whose value is placed around 14,800 levels," Mohammad said.
In between, however, there is a bearish gap zone of 14,652–14,785 registered on April 12, but as the Nifty heads into monthly expiry, short-covering rally can't be ruled out in the next two sessions, provided the index trades above 14,600 in the next session, Mohammad said.
If the index closes below 14,484 in the next session, the tide can turn in the favour of bears, paving the way for a rangebound move between 14,600 and 14,200, he said.
India VIX fell by 1.78 percent from 23.49 to 23.08 levels. Options data indicates that the Nifty can see a wide trading range of 14,400-14,880.
On options front, maximum Put open interest was seen at 14,000 followed by 14,500 strike, while maximum Call open interest was seen at 15,000 followed by 14,800 strike. Call writing was seen at 14,850 then 14,900 strike, while Put writing was seen at 14,500 and 14,600 strike.
The Bank Nifty opened flat to negative at 32,228.95 but managed to hold 32,150 levels and headed towards 32,800 levels. It closed 460.15 points, or 1.43 percent, higher at 32,735.30.
The index formed a bullish candle on the daily scale and continued forming higher highs from the last five sessions. "The Bank Nifty has to continue to hold above 32,500 for an upmove towards 33,000 and 33,333, while on the downside support can be seen at 32,150 and 32,000 levels," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On the stock front, bullish setup was seen in NALCO, Hindalco, InterGlobe Aviation, SRF, Tata Steel, Tata Chemicals, Divis Labs, Voltas, SBI, NMDC, Vedanta, Reliance Industries, Cummins India, Cholamandalam Investment, Jubilant Foodworks, Siemens, Bajaj Auto and JSw Steel. Weakness was seen in Berger Paints, Shriram Transport Finance, Maruti Suzuki, Colgate Palmolive, Dabur and M&M, he added.