The Nifty50 ended the week on a month-high, as the measure announced by the RBI in the morning to boost liquidity and reclassify NPAs for commercial banks lifted the mood. Positive global cues also aided the rally on April 17.
Rate sensitive stocks--banking & financial services, auto and realty--outperformed the others.
The Nifty rallied 3 percent to close above 9,250 levels and formed a Hanging Man pattern on the daily and the weekly charts. It was up 1.7 percent for the week and continued to make higher highs, higher lows for the second consecutive week.
A Hanging Man is a bearish reversal candlestick pattern, usually formed at the end of an uptrend or at the top (around 1,183-point rally from its recent low of 8,083 recorded on April 6). In a perfect Hanging Man pattern, there will be a small upper shadow or no upper shadow at all, a small body and long lower shadow.
Market breadth remained in favour of the advancing counters for the fifth consecutive session, a sign of relief for the bulls.
Experts expect the index to consolidate in coming sessions and feel 9,324 could be a crucial level for further upside.
The Nifty50 opened strong at 9,323.45 on positive global cues but came off day's high after RBI announcements to hit the day's low of 9,091.35. The index gained strength again in the last couple of hours of trade and closed at 9,266.75, up 273.95 points or 3.05 percent.
"Albeit Nifty50 witnessed a breakout above its minor congestion zone of last four trading sessions, it registered a Hanging Man kind of formation on both the daily as well as the weekly charts. Usually, this kind of formation occurs around short-term turning points and hence suggests some sort of exhaustion in the ongoing upmove," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
"Moreover, our twin momentum oscillators generated a sell signal, hinting either a sideways consolidation or a near-term corrective downswing to occur in the next couple of trading session. However, confirmation of weakness on a price chart will occur if Nifty slips below 9,091 levels in the next trading session then the initial target will be in the zone of 8,885 – 8,820 levels whereas bigger correction shall be expected on a close below 8,820," he said.
If the upmove extends beyond 9,324, then the index may go up to 9,512, he said.
For the time, Mohammad said traders should avoid fresh positional longs, whereas shorting can be considered below 9,091 for a target of 8,850 with a stop above intraday high, Mohammad said.
On the monthly options front, maximum Call open interest was at 10,000 then 9,000 strike while maximum Put open interest was at 8,000 then 9,000 strike. Put writing was seen at 9,000 then 9,200 strike while Call writing was seen at 9,500 then 9,800 strike.
India VIX fell by 7.61 percent to 42.59 levels. VIX is cooling down from higher levels, which is providing support to the market.
The Bank Nifty outperformed the benchmark index for the second consecutive session and rallied by 6.61 percent to close at 20,681.50.
The index opened above its hurdle of 20,300 but failed to sustain and corrected below 19,700 in e first half of the session.
However, it rallied sharply by more than 1,100 points from day's low in the later half and formed a bullish candle on the daily scale. It moved up by around 4 percent on weekly basis and formed a bullish candle.
"The Bank Nifty moved above 20-DEMA for the first time in the last two months, which is a sign of relief for the bulls. However, it is yet to cross its recent swing high of 21,462," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
"Going forward, we may see an extension in ongoing bounce towards 21,500 - 22,000 levels while support is inching higher towards 19,700 and then 19,100 levels," he added.