Traders can go long with a stop below 11,250 and look for an initial target of 11,500, Mazhar Mohammad of Chartviewindia.in said.
The Nifty50 crossed its previous swing high in the last hour of trade and closed near six-month high on August 18, driven by banking & financials. The rising hope for a better rural economy given the monsoon progress and expectations of likely higher government spending boosted sentiment.
The index reclaimed 11,400 levels intraday and closed over a percent higher to form a bullish candle on daily charts as the closing was higher than opening levels.
Given the sharp upside after consolidation seen in the previous few sessions, experts expect the index to touch 11,500-mark if the momentum stays in the coming sessions.
Traders can go long with a stop below 11,250 levels and look for an initial target of 11,500, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in said
The fall in volatility also seems to favour the bulls as India VIX fell by 4.13 percent at 21.30 levels.
The Nifty50 opened marginally higher at 11,259.80 and extended gains in the last couple of hours of trade to hit a day's high of 11,401.70. The index settled at 11,385.40, the highest closing level since February 27 this year, up 138.30 points or 1.23 percent.
"The Nifty50 appears to have resumed its uptrend with a fresh breakout after surpassing previous swing highs present around 11,366 levels. Armed with this fresh breakout, the bulls can head to bridge the bearish gap present in the zone of 11,384–11,536 levels, which was formed as an initial reaction to the current COVID crisis on February 28," Mohammad said.
Once the Nift50 manages to sustain above 11,536 then it can strengthen the bullish sentiment further and can open up bigger targets, he said.
Post this breakout, 11,253 may remain the critical short-term support level below which the current bullish undertone shall ideally fade away, whereas a short-term downtrend shall kick in only on a close below 11,111, Mazhar said.
Options data suggested that the trading range for the Nifty has been shifted higher to 11,200 to 11,600 levels for the coming few days, compared to 11,000-11,400 in the previous session.
Maximum Put open interest was at 11,000 followed by 11,200 strike, while maximum Call open interest was at 11,500 followed by 12,000 strike. Minor Call writing was seen at 11,400 and 11,700 strike while Put writing was seen at 11,300 then 11,200 strike.
The Bank Nifty opened positive and continued its momentum towards 22,222 levels. It managed to hold its 50-DEMA and closed 469.75 points or 2.16 percent higher at 22,170.60, forming a bullish candle on the daily scale with bullish crossover on the mechanical indicator.
"It managed to recover most of its losses made in the last week and looks like the bulls are back on track to see the higher momentum. Now it has to continue to hold above 22,000 to witness an upmove towards 22,500 and 22,750 while on the downside, immediate support is seen at 21,750 then 21,400 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Positive setup was seen in Grasim, Berger Paints, Ambuja Cements, SRF, ACC, UltraTech Cement, Pidilite Industries, JSW Steel, Voltas, Asian Paints, Titan, TVS Motor, Jubilant Foodworks, Tata Steel and Reliance Industries. Weak structure was seen in BPCL and HPCL.Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Moneycontrol.