Nifty formed small bodied bullish candle on the daily chart as closing was higher than opening level.
Nifty opened higher at 11487 and climbed further to hit an intraday high of 11535. Nifty closed at 11521, up 81 points.
Nifty recouped previous day's losses to trade higher throughout the session and closed above 11500 mark. Positive global cues, and buying in banks and IT stocks supported the market. The broader markets continued to outperform frontliners with Midcap and Smallcap indices rising over a percent each.
After the initial uptick, the benchmark hovered in a narrow band. However, swift recovery in the banking majors in the last hour of the trade pushed the index to the day’s high.
Considering the prevailing scenario, we suggest keeping a close watch on the outcome of the US Fed meet for cues.
Nifty has been in a range for last few sessions and hence unless the index decisively crosses 11570 level, the major upside is unlikely.
Lack of follow through to the last Monday's sell off is hinting that market slipped into a sideways phase as Nifty traded in a narrow range of 94 points. Though, at this point in time, larger trading range seems to be present between 11600 /11200 level, for next few trading sessions 11570 /11383 appears to be critical short term levels to watch out for.
Weakness on intraday basis can be expected in next session if Nifty slips below 11442 levels whereas a close below 11383 can induce bigger weakness going forward.
Nifty is forming higher top - higher bottom on lower time frame and supports are slightly shifting higher with buy on decline strategy.
Similarly if bulls manages a strong close above 11570 level then the decks to retest recent swing high of 11798
will be cleared.
For the time being, it looks prudent to focus on stck specific opportunites by avoiding long side bets on Nifty unless a strong close is witnessed above 11570 level.
All sectoral indices closed in the green on with Power, Bankex, Telecom, Healthcare, Finance and Basic Materials logging gains of over a percent each.
- Someshwar, Technical analyst, Equidius Research