The Nifty50 remained positive for the major part of the day weathering a volatile season and ended at a record high on December 29 on the back of banking & financials.
The index continued to gain for the fifth consecutive session and formed a small bullish candle on the daily charts as the closing was higher than the opening levels.
Experts say the Nifty50 may surpass the key milestone of 14,000 but one should tread with caution, as the market had reached overbought levels.
Traders should be cautious and watch from the sidelines,Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
The Nifty50 opened higher at 13,910.35 and hit an intraday record high of 13,967.60 in morning but then it turned volatile to close 59.40 points higher at 13,932.60.
"Despite this kind of positive sentiment for the day, advance-decline ratio remained almost flat, with an equal number of stocks closing in the negative terrain for every single stock which rallied, hinting at a cautious approach in the broader markets," Mohammad said.
Moreover, some momentum oscillators, both on the daily as well as the weekly charts, reached overbought levels pointing towards a stretched rally, he said. Hence, it is critical for the index to sustain above 13,859 in the next trading session, as a breach of this can attract intraday selling pressure. A close below the said level may attract more profit booking, he said.
In case if the bulls manage to push the index beyond 14,000, then the rally can expand upt o 14,200, Mohammad said.
India VIX moved up by 1.76 percent from 20.42 to 20.79 levels.
On the options front, maximum Put open interest was seen at 13,000 followed by 13,500 strike, while maximum Call open interest was at 14,000 followed by 14,300 strike. Call writing was seen at 14,300 then 14,100 strike while Put writing was seen at 13,900 then 13,800 strike. Options data suggested that the Nifty could see an immediate trading range of 13,700 to 14,200 levels.
The Bank Nifty opened gap up at 31,006.90 and all the banking counters moved northward as a result the index hit an intraday high of 31,359.35. It gave the highest daily closing of the last 218 sessions with gains of 441.50 points or 1.43 percent at 31,322.50.
The index formed a bullish candle on the daily scale and continued its higher highs-higher lows formation of the last four sessions.
"Now the Bank Nifty has to continue to hold above 31,000 to witness an upmove towards 31,500 and 31,750, while on the downside, support is seen at 30,800 and 30,500," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
A positive setup was seen in IndusInd Bank, Indraprastha Gas, Mahanagar Gas, Tech Mahindra, Axis Bank, ICICI Bank, HDFC, Mindtree, Dabur, Infosys and Siemens, while weakness was seen in Jindal Steel & Power, Hindalco, Nestle India, Coal India and NTPC, he added.