The Indian equity markets witnessed a strong and encouraging recovery, with benchmark indices opening the week on a positive note through a significant gap-up start. Supported by favourable global cues and broad-based buying interest across sectors, the Nifty50 index successfully reclaimed its 50-DEMA, signalling renewed bullish momentum. The index maintained its positive trajectory throughout the session and concluded the day at high of 23440 zone, registering an impressive gain of 1.68%. Overall, the session reflected improving market sentiment and strengthening investor confidence.

The broad-based market participation, coupled with a significant contribution from heavyweight counter Reliance Industries (RIL), played a pivotal role in reinforcing the positive market sentiment and lending strength to the overall market undertone. From a technical perspective, the Nifty50 has registered a breakout from an ‘Inverted Head and Shoulders’ pattern on the daily chart, indicating the possibility of a bullish trend reversal. Furthermore, the prevailing lower-high and lower-low formation has been invalidated as the index decisively surpassed its recent swing high, further strengthening the bullish outlook.

On the downside, the unfilled gap zone of 23200-23120, coinciding with the 50-day EMA, is expected to act as an immediate support cushion against any intermittent profit booking. The 23000 mark remains a crucial and sacrosanct support level. On the upside, the improving chart structure indicates potential headroom towards the 23560-23620 zone, representing the bearish gap on the daily chart on intermediate basis. With the technical setup turning increasingly constructive, the strategy would be to utilize any short-term declines towards the support zones as opportunities to accumulate long positions in the index.

Additionally, the price action in the high-beta BankNifty index, along with the Midcap and Smallcap indices, warrants close monitoring. A sustained improvement in these segments, supported by broader market participation, could provide further impetus to the ongoing bullish momentum and significantly contribute to the potential upward trajectory of the broader equity markets in the near term.

Key levels to watch

NIFTY

Support: 23200 – 23120

Resistance: 23560 – 23620

BANKNIFTY

Support: 54500 – 54300

Resistance: 55100 – 55500

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