The Nifty50 remained in positive terrain and hit a fresh record high on December 16, backed by all sectors but banks as positive global cues lifted sentiment.
The index formed a small-bodied bullish candle with a long lower shadow on the daily scale, indicating that every small decline was being bought by the bulls.
Experts say the momentum will continue and the Nifty can hit 13,800-mark in the coming sessions.
For the time, trade is clearly on the long side, hence traders with a high-risk appetite can go long by making intraday dips, if any, with a stop below 13,600 and look for an initial target of 13,800, Mazhar Mohammad of Chartviewindia.in said.
After opening sharply higher at 13,663.10, the index saw consolidation. It gained strength in the afternoon to hit an intraday all-time high of 13,692.35 and closed 114.80 points higher at 13,682.70.
India VIX remained below the 20-mark, which indicates that the bulls are in control of Dalal Street. India VIX was down 0.72 percent from 19.34 to 19.20.
"The Nifty50 appears to have registered a consolidation breakout as it not only opened with a gap-up but also closed way above the last 5-day sideways consolidation zone of 13,600–13,400 levels. Interestingly this breakout's target of 13,800 is also coinciding with the upper boundary of last 18-day ascending channel," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
If the bulls manage a fresh breakout above the said channel, the rally shall get expand into the 14,000-14,100 zone. Unless the Nifty closes below 13,600, the market trend shall continue to remain buoyant.
However, if the index closes below 13,600, then it shall once again bring back uncertainty about the upward direction of the markets where short- term trend reversal in the favour of the bears can be expected, according to him.
On the options front, maximum Put open interest was seen at 13,000 followed by 13,200 strike while maximum Call open interest was at 13,000 followed by 13,500 strike. Marginal Call unwinding was seen at most of the higher strikes while major Put writing was seen at 13,500 then 13,600 strike. Option data indicated that the Nifty could remain in an immediate trading range of 13,400 to 13,800 levels.
The Bank Nifty underperformed the Nifty and remained consolidative in a 300-point range at 30,600-30,900. It managed to hold immediate support of 30,500 but follow-up was missing as many PSU banks came under pressure.
The index rose just 7.35 points to 30,698.40 and formed a bearish candle on the daily scale as the closing was lower than the opening level.
"The Bank Nifty failed to give momentum even after crossing an immediate hurdle of 30,800. Now it has to continue to hold above 30,500 to witness an upmove towards 31,000 then 31,200 while on the downside, supports are seen at 30,300 then 30,200 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
A positive setup was seen in DLF, Ashok Leyland, Havells, Jindal Steel, Jubliant Foodworks, HDFC, Bharti Airtel, Hindalco, Titan, Asian Paints and TCS while weakness was seen in PNB, Canara Bank and Tata Chemicals, he added.