Bullish patterns hint at further upside, Nifty may touch 22,500: Analysts

Bullish patterns hint at further upside, Nifty may touch 22,500: Analysts

A majority of technical charts show a bullish pattern formation, suggesting Nifty could reach 22,500 if it maintains levels above 21,800. Alternatively, support is seen at 21,600 levels, according to technical analysts.

They note positive setups in various stocks, including Maruti, TVS Motor, ACC, Biocon, Tata Motors, M&M,Persistent, Ambuja Cements, Adani Ports, Federal Bank, Trent, and Indian Hotels.

CHANDAN TAPARIA ANALYST-DERIVATIVES, MOTILAL OSWAL FINANCIAL SERVICES

Where is Nifty headed this week?

Nifty has formed a bullish candle on weekly scale and registered highest weekly and second-highest daily close, which indicates bulls are dominating higher zones. The index respected its 61.80% retracement (21,515) of the recent entire move (21,137 to 22,126) and turned higher with the formation of higher top – higher bottom. Indicators are also giving bullish crossover in daily and weekly scales. Till it holds above 21,800, a fresh leg of the rally could be seen towards 22,201 and 22,500. Major support exists at 21,515-21,600.

What should traders do?

India VIX turned lower from a recent high of 16.57, along with the rise in the Put-Call ratio as sustained Put writing is seen at 22,000. FII index long-short ratio turning higher from lower zones, with a positive stance in the global equity market, could keep the trend intact in the domestic market. Bullish setup is seen in auto, IT, CPSE, power and energy sectors. Positive setups are seen in Maruti, TVS Motor, Tata Motors, M&M, Persistent, Ambuja Cements, Adani Ports, Federal Bank, Trent and Indian Hotels.

AJIT MISHRA SVP-RESEARCH, RELIGARE BROKING

Where is Nifty headed this week?

Nifty has been trading in a broadening formation and is set to test its record high. We are eyeing sustainability above 22,150 to mark the resumption of the up-trend and inch towards 22,500. The support has shifted to the 21,450-21,700 zone. The recovery in banking heavyweights combined with rotational buying in other index majors has raised the hope of a possible breakout attempt. However, mixed global cues may continue to weigh on sentiment and prompt kick-jerk reactions in between.

What should traders do?

Since the majority of sectors is aligned with the benchmark now, participants should continue with a ‘buy on dips’ approach and focus on stock selection. ACC has reclaimed a record high and is on an up-trend. Biocon is attempting a trend reversal. Chambal Fertilisers has formed a fresh pivot for the next leg of the up-move. Granules, which reclaimed a record high, have seen a consolidation breakout with noticeable volume. L&T has set for reversal after a marginal decline, which can be accumulated gradually.

PRITESH MEHTA EXECUTIVE VICE PRESIDENT, YES SECURITIES

Where is Nifty headed this week? Though the set-up has been positive, Nifty is yet to confirm a break beyond the range of 21,600-22,100. Both financials services and Bank Nifty indices have aided the recent up-move. Relative strength studies of these indices against Nifty highlight that the ratio is attempting a pullback off an important support zone. Continuation of a similar trend would result in outperformance of these indices (i.e. components within these indices) against Nifty. Bullish follow-through of the ongoing broadening pattern is essential for a move towards the 22,300 zones for Nifty.

What should traders do?

Bank Nifty and financials indices have created short-term base after prolonged underperformance. Stability in ICICI Bank and HDFC Bank is further likely to aid the bullish sentiment; follow-through moves are expected to continue with the important support of 45,000 for Bank Nifty. After a brief pause, the Nifty PSE index reclaimed its previous peak of February 24, with a double-top buy, implying renewed action in this space. GAIL, IOC and NTPC are witnessing bullish follow-through moves, suggesting a rally of 10-12% in the near term.

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