The bulls are in no mood to relent, with the Nifty closing above the 18,300-mark for the first time on October 14, continuing its northward journey for the sixth consecutive session.
The rally across sectors, barring auto, boosted sentiment. The Nifty formed a bullish candle on the daily as well as weekly charts as the closing was higher than opening levels, which experts say indicates an uptrend in the coming sessions. They see the index marching towards 18,500.
The Nifty opened higher at 18,272.85 to hit an intraday high of 18,350.75. It ended 176.70 points, or 0.97 percent, higher at a record close of 18,338.50.
The index got a big push from a late surge in banks. It gained 2.5 percent during the week.
Volatility also cooled down, supporting the bulls. India VIX, a measure of expected volatility in the market, fell 2.06 percent to 15.77 levels.
"Overall, comparative lower VIX suggests that the bulls are holding a tight grip in the market. Now VIX needs to cool down below 15-14 zones to continue the smooth ride," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
Also read: Taking Stock: Bull charge pushes Sensex, Nifty to new highs; bank, metal, IT stocks shine
The Nifty appears to have decisively emerged from its three-week consolidation range of 17,947–17,326 on sustained buying after a gap-up opening for the last two trading sessions, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.in.
“This seems to have opened up a fresh leg of upswing with higher targets present around 18,500 levels," Mohammad said.
On the daily chart, the last 19 sessions of price behaviour evolved into an ascending channel, which is pointing to resistance around 18,450 for the next session.
If the Nifty closes above it, then a higher target of 18,900 can be projected. On a dip, the Nifty may make an attempt to bridge the day’s bullish gap zone of 18,248–18,197, which should be seen as an opportunity to create fresh long positions with a stop below 18,200 on a closing basis.
Mohammad advises traders to buy the dip with a stop below 18,190.
Also read: Sensex surpasses 61,000 for first time; investors richer by Rs 68 lakh crore in FY22
On the option front, maximum Put open interest was seen at 18,000 followed by 17,500 strike, while maximum Call open interest was seen at 18500 followed by 19000 strike.
Minor call writing was seen 18,800 then 18,600 strike, while meaningful Put writing was seen at 18,000 then 18,300 strike.
The data indicates that the Nifty can trade between 18,000 and 18,500 in the immediate term.
The Bank Nifty also gained strength, hitting a new high of 39,375.05. It closed 1.82 percent higher at 39,340.90 and formed a bullish candle on the daily chart.
On the weekly chart, too, it formed a bullish candle, gaining 4.1 percent. "Sustaining above Thursday's low of 38,673 levels, this index should head higher towards upper boundary of the channel whose value is placed around 39,900 levels," Mohammad said.
Also read: Nifty scales 18,300, Sensex summits 61,000: Five factors behind the rally
The index has to hold above 39,000 to witness an upmove towards 39,800 and 40,000, while on the downside, major support is at 38,800 and 38,500, Taparia said.
On the stock front, a bullish setup was seen in IRCTC, Adani Ports, Wipro, Adani Enterprises, Grasim, Havells, PFC, Canara Bank, HDFC Bank, Info Edge, NALCO, ITC, Power Grid, Divis Labs, L&T Finance Holdings, IndusInd Bank, Bata India, ICICI Bank, ACC and L&T. Weakness was seen in Coal India, Metropolis Healthcare, Dr Lalpath Labs, Lupin, Container Corporation, Indraprastha Gas, Biocon and Petronet LNG, Taparia said.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.