Most indicators signal strong bullish trend

A second consecutive gap up and Nifty closes at new all time high and ends the truncated week on a positive note. On a Weekly scale, this is a second consecutive positive close and a range breakout of three weeks for Nifty and now shifting to 18,500 – 17,950. BankNifty contributed to the gains by breaking out of its four weeks of range and gaining more than 4 per cent to end at all time highs.

The buying momentum was led by Oil and Gas and IT Index while Banks gained traction in second half and ended the session with a strong advance-decline ratio of 3.67. It was a week where every other sector has seen positive momentum and a broader market buying was seen.

With these gains, we believe there may be some contraction in coming week since the range which was largely 17,500 – 17,900 is now shifted towards 18,453 – 18,092 and we may see sideways consolidation play before any further decisive move.

BankNifty is still in expansion mode and the recent traction seen, we believe it can outperform in next week with support now placed at 39,000 – 38,900 while on the higher side momentum will continue to persist.

HDFC Bank numbers will add further fuel to this space given it is expected to be 18 per cent higher year on year. Technically, most indicators are giving strong bullish reading be it moving average for trend, ADX for strength or RSI for momentum. The prices may have been higher but it is important to see RSI making a lower high. The market remains bullish but one should look for meaningful dips.

(The author is Technical Analyst, Finversify)