'Nifty could move towards 18,000, but don't take aggressive bullish bets'

#Expert Columns, #Nifty, #Sensex, #Technicals

Market is moving in a strong bullish grip and continuously touching new milestones. Nifty is moving in a parabolic up move and all small dips are getting bought into quickly. Bulls are charged for the game and thus keeping ball in their court. Two factors supporting the upswing in the domestic market are – strong rally in the global market and the Covid vaccination drive being conducted in full swing.

On September 22, Nifty gave a range breakout on daily chart and rallied towards 17,800 zone. Since last few weeks, we are witnessing buying interest across various sectors. Market breadth remained in favour of the advancing counters on most of the sessions, which certainly bodes well for the bulls. Also, sectoral rotation has ensured that markets have stayed in bull grip.

Technically, Nifty is making Higher Highs Higher Lows on all major time frames and not showing any major sign of weakness as of now. It is holding well above the 200 percent reciprocal retracement level of the previous fall from 12,430 to 7,511, which is placed at 17,350. Momentum oscillator RSI is also moving in overbought zone from quite some time, but prices are not ready to give up the momentum. Index VIX is also rebounding from its strong support of 11-12 zone and moved above 15 mark, which can fuel volatility in the market at higher levels.

The ongoing up move is supported by good amount of long positions as we witnessed continuous long build-up in August and September series. Index is currently long heavy as open interest is at highest level since March 2020. However, we are seeing any sign of reversal at current juncture and thus, ongoing momentum may extend further towards 18,000 mark. But, it’s advisable to not take aggressive bullish bet at current levels and rather wait for a small price or time correction to initiate fresh longs.

Considering overall chart structure, we maintain our positive stance on the market and would advise traders to look for buying opportunity on declines. At current juncture, support for Nifty is placed at 17,350 and 17,100 zone, while resistance can be seen around 18,111 levels.

Bank Nifty started catching up the momentum of benchmark indices and gave a breakout above its previous highs. After a long consolidation, the banking index finally gave a breakout and sustaining above the same. Till the time it holds above 37,000 mark, view remains positive for an upmove towards 39,000 and then 40,000 zone.

On other sectoral indices front, Nifty Metal index has taken resistance around its previous highs and started its southward journey. It is expected to correct further towards 5,200 levels in the coming days. While financial services and FMCG indices are moving in strong trend and gave range breakout on lower time frame. We can see continuation in ongoing momentum in financial services and FMCG space.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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