Nifty set to head higher after two days of consolidation: Angel Broking
“After an extended weekend, our markets opened flat despite SGX Nifty suggesting a gap down opening on Tuesday. During the initial trade, Nifty dipped a bit; but after this what we witnessed is ‘Once in a Blue Moon’ kind of scenario. This early morning decline was bought into and then we had a good one way up move throughout the session to surpass recent hurdles. This was followed by yet another strong bout of buying for the index. However, last couple of days did not see any action, but we need to appreciate the fact that despite all Asian bourses correcting brutally on the last day, our markets managed to close safely above 11000 without having any damage.
Since last few days, index was consolidating and midcaps / small caps started attracting traders’ attention. However, first trading day of the week turned out be the trend deciding day for our benchmark. Due to all this positivity, Nifty has confirmed a breakout from the ‘Falling trend Line’ on daily chart. Thus, muted action in last two days should be construed as a pull back or a breather. Further, if we observe the daily chart meticulously, we can see a formation of ‘Megaphone’ pattern. Recent supports of 10583 and 10585 being the base of the same and the higher trend line is extended towards 11300 – 11350. Hence, a move towards this important junction cannot be ruled out in days to come. Traders are advised to trade with a positive bias and expect 10994 – 10840 to act as a strong support zone now.
As far as individual sectors are concerned, barring IT and FMCG, all other sectors contributed in this rally and now also, they look poised for extended moves; thereby providing credence to the up move. If we have to highlight few sectors then it’s no brainer, banking certainly looks encouraging and ought to participate as well if we have to see a genuine rally. Within this, Midcap private banking remains to be our preferred space along with selective PSU banking counters. Also, midcap index which has been oscillating within the boundaries of a ‘Triangle’ pattern since September, has finally confirmed its breakout and is set to continue the upward trajectory.”