Tech View: Nifty breaks major hurdles post BJP victory; what’s the trade set-up for Tuesday?

MUMBAI – The more than 400 points rally in Nifty 50 following a strong victory for the Bharatiya Janata Party (BJP) in the recently concluded state assembly polls saw the benchmark comfortably surpass major hurdles and form a long bull candle on the daily charts.

The index ended at a record closing high of 20686.60 points with 2.1% gains, after hitting an all-time intraday high of 20702.65 points.

“The huge opening upside gap of Monday remains unfilled. Technically, this pattern indicates strong upside momentum and a decisive upside breakout of the previous top at 20200 levels,” said Nagaraj Shetti, technical research analyst, HDFC Securities.

If one looks at the options positioning, then heavy build-up in open interest was seen in the 21000 strike price call option of Nifty 50, with premiums surging 698%. Most higher calls as well as put option strikes have seen heavy build-up, suggesting that the bulls are geared up to take the index further higher.

“Though Nifty is placed at the highs, still there is no indication of any reversal pattern unfolding at the new highs,” Shetti said.

The next upside levels to be watched are around 20900 levels, which is a 61.8% Fibonacci extension, while the immediate supports are placed at around 20500 and 20,290 levels, respectively, he added.

Following are the comments from a few more technical chartists on the current market trend: Choice Broking
On the daily charts, the Nifty sustained its upward momentum after a gap-up opening of 300 points, forming a robust bullish candle indicative of a strong uptrend.

However, a closer examination of lower time frames, particularly the hourly charts, revealed an extremely overbought condition.

A correction, either in terms of time or price, seems warranted, suggesting that one should consider entering positions on dips for a more favorable risk-reward profile.

Rupak De, senior technical analyst, LKP Securities
The Nifty kicked off with a gap up, propelled by BJP’s exceptional performance in the state election. Technically, the index had already surged past the critical resistance level of 19,850. Since then, there has been a significant shift in put positions towards higher strike prices, foreseeing a robust upward rally in the near future. The overall sentiment appears highly bullish until Nifty falls below 20,400. On the higher end, the index might move towards 21,000.

Jatin Gedia – technical analyst at Sharekhan by BNP Paribas
On the daily charts, we can observe that after breaking and closing above the previous swing high of 20222, Nifty today has witnessed follow-through buying interest.

The Nifty managed to hold on to the gains and built upon them, indicating that there is more steam left in the rally.
On the upside, we expect it to stretch higher to 21,500.

The daily momentum indicator has a positive crossover and thus, in case of a dip/consolidation towards the support zone of 20550-20500, it should be used as a buying opportunity.

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(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)