Nifty will continue upward move

Nifty regained the momentum and witnessed a follow up buying as it closed near its all-time high levels touched in September. The buying was seen in most sectors such as Energy, PSE, IT and Infra while on the other hand, we have seen some muted action in Pharma, PSU Banks and FMCG. The positive sentiment was visible despite some negative cues coming from the global markets as US equities market major benchmark index were in the red. The positive opening of European indices further cemented the domestic sentiment.

The short term moving averages remain positive on a rolling basis indicating the trend is up. Interestingly, we have seen RSI giving a Positive reversal formation. Firstly, it is a momentum indicator that tells us a lot about the price change and its speed. There was a positive reversal which indicates that the RSI formed a lower low while the Index (Security) created a higher low; in the case of Nifty we have seen it on the Daily scale with 14 periods RSI. Now the crux is that we are witnessing a secular bull market and Index in the unchartered territory which comes with its own merits and certain risk aspect. There may be certain bearish divergences as it happens now in the case of Nifty as well but given the underlying strength in price and momentum, we would want to identify the area of opportunity for our money rather than playing contrary.

Long build-ups have been seen in Open Interest on 18,000 and 18,200 indicating the positive sentiment. Strong support for Nifty is at 17,600-17,550 and we believe Nifty will continue to maintain its upward move with some minor corrections; which are also healthy in nature. BankNifty though is positive for the third consecutive day but it still is stuck in a broader range of 38100 - 37150. A decisive close above upside resistance/range break would add further momentum to the benchmark index as well as the broader market. Maintaining a bullish stance/long view is suggested with a strict check on lower levels mentioned as a point which if broken will negate the view.

(The author is Product Head, Finversify)