Technical View | Nifty hits 7-week high, may extend rally to 18,000

Market

The Nifty traded strong for yet another session and closed above 17,800 on April 12, helped by positive global cues and gains in technology, pharma auto and banking names.

After opening higher at 17,760, the index hit the day’s high of 17,826 in the afternoon. It settled 90 points higher at 17,812, its best closing since February 21. It formed a bullish candle on the daily charts and made higher highs and higher lows for the eighth consecutive session.

It also remained above the downward sloping resistance trendline for the second day and above all key moving averages, which is a positive sign.

If the momentum remains strong, the next resistance will be 17,900-18,000 and support at 17,700-17,500, experts said.

"On the daily chart, the index has remained above the channel breakout, suggesting a positive reversal. The daily momentum indicator RSI (relative strength index) is in a bullish crossover and rising," Rupak De, Senior Technical Analyst, LKP Securities, said.

The market will remain buy-on-dips as long as the index remains above 17,700. On the higher end, the rally may extend to 17,900-17,970, he said.

The weekly options data shows the maximum Call open interest was at 18,000 strike, indicating a possibility of another 200 points run on the Nifty in the coming sessions, followed by 17,900 and 17,800 strikes. Call writing was also seen in same strikes.

On the Put side, the maximum open interest was at 17,700 strike followed by 17,600 and 17,500 strikes, which can act as support for the Nifty, with writing at 17,800 strike then 17,600 strike.

Banking index

The Bank Nifty remained positive for most of the session, closing 191 points higher at 41,558. It formed a bullish candlestick on the daily timeframe, making higher tops, higher bottoms for the second straight session.

"The next upside target for Bank Nifty is at 42,000 levels," Nagaraj Shetti, a technical research analyst at HDFC Securities said.

Kunal Shah, Senior Technical Analyst at LKP Securities, said the index remains in buy mode and is likely to achieve the target of 41,800-42,000 on the upside where fresh Call writing is visible.

Downside support is at 41,500-41,400 and as long as the level is not breached on a closing basis, the trend will remain positive, Shah said.

India VIX, the fear index, climbed 2.5 percent to 12.27 levels but overall, remained low, which is supportive of bulls.

The market breadth also remained positive, helping the broader markets end higher. Nifty midcap 100 and smallcap 100 indices rose 0.65 percent and 0.53 percent.

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