Technical View | Nifty hits 10-week high, may march towards 18,000-18,300 in May series

Market

It was a strong monthly expiry day for the Nifty50 on April 27 as the index has not only been making higher highs and higher lows but also extended a northward journey for the fourth consecutive session. Largely it was driven by most of the sectors, barring FMCG, which closed flat with a negative bias.

The Nifty50 opened flat, but after initial volatility, it gradually gained strength as the day progressed and hit a day’s high of 17,932. The index closed near the day’s high, rising 101 points to 17,915, the highest closing level since February 17 and formed a bullish candlestick pattern on the daily charts. Momentum indicators RSI (relative strength index) at 67 and MACD (moving average convergence divergence) remained bullish on the daily scale.

Given the four-day run, the index on the weekly timeframe formed a bullish candlestick pattern making higher tops for the fifth consecutive week.

Given the consistent momentum, the Nifty50 is likely to inch up towards the 18,000-18,300 area in the May series, with support shifting higher to 17,800-17,700 levels, experts said.

“A long bull candle was formed on the daily chart, which indicates an upside breakout of the range movement and also the resistance of the previous lower top at 17,863 levels. Thursday’s upside breakout has unfolded few technical developments on the bullish side,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.

The previous bearish pattern like lower tops and bottoms has been negated and the new higher bottom has been confirmed at 17,553 (April 21).

Nagaraj said the present chart pattern could open up a new bullish sequence of higher tops and bottoms in the near term. Hence, he feels the underlying trend of Nifty continues to be positive.

“Having sustained above the important hurdle of 17,865 levels, the Nifty is expected to move towards the next upper trajectory of 18,200-18,300 levels in the near term. Immediate support is at 17,800 levels,” he said.

Option data also indicated that the Nifty may touch the 18,000 mark, which has the maximum Call open interest followed by a 17,900 strike, whereas 17,800, which has the maximum Put open interest, is expected to be immediate support for the index.

The meaningful Call writing was seen at 18,700 strike, followed by 18,300 strike, whereas the Put writing was at 17,900 strike, then 17,800 strike.

Bank Nifty slightly underperformed Nifty50 but closed above the 43,000 mark, for the first time since January 3. The index rose 171 points to close at 43,001 and formed a bullish candlestick pattern on the daily scale making higher highs for the fourth consecutive session.

“On the daily chart, the index has remained above the consolidation breakout point. Besides, the index has remained above the critical moving average. On the higher end, Bank Nifty might move towards 43,300-43,500 over the near term,” Rupak De, Senior Technical Analyst at LKP Securities said.

On the lower end, the support is placed at 42,750, he added.

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