Nifty index opened positive with runaway gap for second consecutive trading sessions and headed towards 8,300 zones by hitting its fresh eight month high levels. It has recently formed a “Bullish island reversal” on daily chart and has been making higher highs – higher lows from last four trading sessions. It has also given a highest daily close of calendar year 2016 but still finding sustained supply to surpass 8,300-8,333 zones.
Index closed positive with gain of 2.70 per cent in the June series and closed up by 100 points from its series VWAP levels. It has seen Rollover of around 77 per cent which is better than past six month average and indicates that participants are carrying their position to the next series in the hope to start a fresh leg of rally.
We have seen a strong recovery from recent swing low of 7,927 but now it would be a challenge to hold above 8,333-8,350 zones to start the fresh leg of rally in the market. Although immediate trend is intact to positive but now traders has to be cautious as we are near to crucial hurdle in both the indices and already rallied by around 381 points in Nifty from its recent swing lows.
Now if it manages to hold above 8,300-8,333 zones then momentum may extend towards 8400-8450 zones while if it stuck near to hurdle and slips below 8242-8220 zones then momentum may fizzle out to take the index towards 8150 and 8065 zones.
INDIA VIX fell down recently from 21 to 14.65 but towards the close it was positive at 16.29 mark.
Bank Nifty has been moving upwards from last four trading sessions and during the session it headed towards its crucial hurdle of 18000 zones. It closed the June series with the gains of 3.32% and now needs to hold above 18000 zones to start the next move towards 18250-18400 zones while on the downside support exists at 17700 then 17500 zones.
(The author is derivatives analyst, equity research at Anand Rathi Financial Services)