Nifty rallied towards the 18800 mark

In the week gone by, our markets continued their up-move during the mid-week and Nifty rallied towards the 18800 mark. But it fell just short of making a new record and witnessed some profit booking towards the end of the week to end below 18600 with marginal weekly gains.

We have seen a sharp up move since the start of April month and the indices have not seen any price-wise corrective phase in this move. Nifty is trading in a rising channel and has ended around the support end which is placed around 18550. The ’20 DEMA’ support is also placed around 18450 which coincides with the swing low support and thus will be referred to as a make-or-break level in the coming week. On the higher side, the 18700-18800 range is the immediate resistance zone for the index to watch out. In the derivatives segment, there has not been much build-up in the index futures segment by the FII and the Clients. In the options segment, the 18600 and 18500 put has decent open interest outstanding while the 18700 call option has high open interest. The Bank Nifty index has closed around its ‘20 DEMA’ support which is placed around 43850. The swing low support for Bank Nifty is around 43700 which will be the crucial level for this index. A failure to rebound from this support zone could drag the Banking index towards its next support which is placed around 43320. The broader markets have also rallied sharply and the midcap index is up by about 18 percent from the lows seen in the month of March. Hence, the momentum readings in the midcap index have reached the overbought zone which indicates the possibility of a short-term corrective phase. Hence, one should keep a ‘Buy on Dip’ strategy for new investments rather than chasing in such an overbought zone. 

Traders are advised to keep a close tab on the above-mentioned levels and lighten up trading longs if the supports are breached. However, the down-move, if any, would just be a corrective phase within an uptrend to relieve the overbought set ups and hence, declines should be used as buying opportunities for positional traders.