The Indian equity markets witnessed a stellar rally, opening on a strong positive note and sustaining the upward momentum through continued buying interest. The follow-through buying over the past couple of sessions has significantly improved market sentiment, enabling the benchmark index to decisively reclaim its 100-DEMA. The Nifty surged over 750 points during the week, reclaiming the crucial 23800 zone and extending its winning streak with another impressive gain of 1.58% in the session. The sustained buying momentum reflects renewed investor confidence and improving market breadth.

The series of consecutive runaway gap-ups highlights the intensity of the recent buying momentum, reflecting the bulls’ eagerness to capitalize on improving market sentiment. From a technical perspective, the Nifty50 index has retraced nearly 61.80% of its recent decline and has successively reclaimed its key 20, 50 and 100 EMAs one after another, with the 200-day SMA now emerging as the next significant hurdle.

However, given the steep and almost vertical nature of the recent up move, the possibility of intermittent profit booking cannot be ruled out. Nevertheless, a cluster of crucial support levels is likely to provide a cushion against any potential profit booking. The immediate support zone is placed around 23620-23500, followed by the 50% Fibonacci retracement level and the unfilled bullish gap in the 23470-23440 region. On the upside, the 24000 mark is well within reach and assumes significance as it coincides with the 200-day SMA. Interestingly, this level also aligns with the projected upside target of the Inverse Head and Shoulders formation highlighted in our earlier analysis.

Going forward, the broader market landscape appears to offer ample opportunities for traders, warranting a stock-specific approach to identify potential outperformers. However, geopolitical uncertainties and volatility in crude oil prices continue to remain key concerns. Hence, participants should remain vigilant towards evolving developments while adhering to a disciplined trading strategy and robust risk management framework.

Key levels to watch

NIFTY

Support: 23620 – 23500

Resistance: 24000 – 24100

BANKNIFTY

Support: 55200 – 55000

Resistance: 55800 – 56200

Osho Krishan, Chief Manager – Technical & Derivative Research, Angel One.