Technical view: Will Nifty be able to hit new highs this week?

Market


Thanks to the rally on Friday, which was supported by a significant increase in the global markets, Nifty ends another week with respectable gains. Lower than-projected US inflation data led to a dramatic decrease in US bond yields and the dollar index, which fueled a robust surge throughout global share markets. The Nifty ends at a fresh 52-week high, and Bank Nifty ends at a fresh all-time high, but the broader market underperformed last week; in fact, the midcap and smallcap indices both registered losses.

Amidst a rebound in international markets, the Nifty is getting closer to its all-time high; its previous all-time high was 18604 on October 21. The Indian equity markets are constantly receiving funding from FIIs, and Friday marked their 11th straight trading session of purchases. As US bond yields and the dollar index decline, they might assist in the market reaching a new record high. Last week saw notable strength for the rupee as well. The sentiment will continue to be driven by the movement of the world markets. The market will be keeping an eye on our domestic inflation statistics.

Technically, Nifty is coming out of a broadening wedge formation and closed at important resistance at 18350. If it manages to sustain above that level, then we can anticipate a rise toward 18500, 18600, and 18800 levels. On the downside, 18300 is a solid support and 18100-18000 area will operate as an immediate demand zone.

Bank Nifty is currently trading over the psychological threshold of 42000 and at an all-time high. The Bank Nifty’s logical next target is somewhere around 43,000. On the downside, 41750 acts as an instant support, and the range from 41000 to 4800 is a crucial demand area.

If we look at the derivative data, the put call ratio is sitting at 1.22 and the long exposure of FIIs to index futures is 62%, both of which point to a bullish tilt in the market. According to the open interest distribution chart, there are no substantial obstacles until 19000, while 18300 and 18000 serve as important support levels.

Pravesh Gour is senior technical analyst at Swastika Investmart Ltd.

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