The Nifty50 started off trade above the psychologically important 13,000- mark and ended with a record closing on November 24. Consistent foreign inflows and as hopes of COVID-19 vaccine availability in India lifted sentiment.
The index closed above 13,000 for the first time and formed a bullish candle on the daily charts as closing was higher than the opening levels.
The rally may extend towards 13,100-13,200, experts said but advised caution as indices are in overbought levels after the recent rally.
Traders should remain cautious as the rally may get choked at any time as revealed by some of the momentum oscillators, which failed to make new swing highs along with the price chart, thereby displaying some sort of negative divergence with a lower top, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
For the time, traders, who are long, should maintain a tight stop below 12,978 on the closing basis, he said.
The Nifty50 opened above 13,000 to hit an intraday record high of 13,079.10 in afternoon trade. It ended at 13,055.20, up 128.70 points ,or 1 percent.
"Despite new life-time highs, at this juncture, momentum is clearly favouring the bulls, as the Nifty50 managed a close above the psychological resistance point of 13,000 levels," Mohammad said.
Throughout the session, the bulls managed to keep the index above 13,000, which may force the bears to run for cover "ahead of the monthly expiry by squaring off their short positions if any in individual stocks. This itself may become the reason for further upmove for next couple of trading sessions which may initially expand the rally towards 13,200 levels", he said.
Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments, also sees 13,100-13,200 as a resistance zone, which could witness some profit booking.
There was a spike in volatility. IndiaVIX went past the 21-mark, gaining a percent.
The banking sector was the driver behind the ally and also the biggest gainer among sectors.
It opened positive at 29,265.60 and rallied 800 points to hit an intraday high of 29,827.80. The index settled at a nine-month high of 29,737.30, up 713.10 points, or 2.46 percent, and formed a bullish candle on the daily charts. It is nearly 2,000 points away from its 52-week high.
The broader markets also joined the bulls' party as the Nifty Midcap index was up 0.7 percent and Smallcap gained 1.1 percent. The market breadth, too, was positive as four shares advanced for every share declining on the NSE.