The Nifty50 closed at a two-and-a-half-month high on May 21 after two straight days of losses, backed by gains in bank and financial stocks. All sectors closed in the green.
After opening higher at 14,987.80, the index extended gains to hit the day’s high of 15,190 in late trade. It ended 269.30 points, or 1.81 percent, higher at 15,175.30.
The index formed a strong bullish candle on the daily charts as the closing was higher than opening levels. It also formed a bullish candle on the weekly scale as it closed with 3.4 percent gains. If the trend continues, a record high is expected sooner than later.
A dip can be an opportunity to create fresh long positions, said Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia. Traders should go long on dip preferably close to 15,100 levels by placing a stop below 14,985, he said.
Falling volatility also supported the bulls. India VIX fell by 2.90 percent from 19.65 to 19.08 levels.
“The Nifty50 appears to be in a strong uptrend as it erased preceding three trading sessions of losses from the highs of 15,137–14,885 levels in just one stroke, which resulted in a robust bullish candle on daily charts,” Mohammad said.
However, the current rally seems to be on the back of a strong short covering from the financial space, which witnessed more than 3 percent gain.
“Therefore this index needs to attract some follow-through buying in next trading session without violating the intraday low of 14,985 levels and as long as this counter sustains above the said low, one can remain positive and look for a retest of the life-time highs present around 15,431 levels,” he said.
In between, 15,336 may pose some resistance but if the trend is strong enough, the level shall be easily conquered by the bulls, he said.
The index Now, it has to hold above 15050 zones to witness an up move towards 15,300 and 15,431, while on the downside, support exists at 15,000 and 14,900 zones.
The options data suggests a broader trading range for the Nifty at 14,800- 15,400 in coming sessions.
On the options front, maximum Put open interest was seen at 14,000 followed by 14,500 strike while maximum Call open interest was seen at 15,500 followed by 16,000 strike. Call writing was seen at 15,700 and 15,600 strike while Put writing was seen at 15,000 then 15,100 strike.
The Bank Nifty opened positive at 33,559.80 and buying interest in all the banking stocks pulled the index towards 34,700 levels.
It closed the last session of the week 1,272.35 points, or 3.82 percent, higher at 34,606.90 and gave the highest daily close of the last 43 sessions.
“The Bank Nifty formed a strong bullish candle on the daily scale and negated its lower highs-lower lows formation of the last two sessions. Now it has to hold above 34,250 to witness an upmove towards 35,000 and 35,250, while on the downside, support is seen at 34,000 and 33,500 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On the stock front, bullish setup was seen in Bank of Baroda, Shriram Transport Finance, IndusInd Bank, SBI, IDFC First Bank, HDFC Bank, ICICI Bank, Axis Bank, PVR, HDFC, Motherson Sumi Systems, Pidilite Industries, REC, M&M, Cholamandalam Investment, LIC Housing Finance and Asian Paints. Weakness was seen in Havells, Marico, Bharat Forge, NMDC, Voltas and GAIL, he added.