Nifty closed near its opening level and formed a Doji pattern on daily chart, suggesting indecisiveness among the bulls and the bears. It continued the uptrend for the third week in a row and closed 2.2 percent higher to form a strong bullish candle on the weekly chart.
It continued the formation of higher lows on a weekly scale as well while supports are gradually shifting higher, which suggest an overall bullish stance.
After opening higher at 10614, Nifty remained in positive terrain throughout the session, touching an intraday high of 10631 and low of 10562.
Nifty rallied for the third consecutive session and closed above the crucial 10600 level, backed by strong Asian cues and optimism of recovery in economy even though coronavirus infections continued to rise.
A rally is likely only if the index decisively crosses and closes above 10630 level in the coming session, otherwise there could be sideways trade, as the index is moving closer to overbought position.
The benchmark indices ended with a gain of 2.4%, on a weekly basis, as optimism about a continued recovery in economic activity offset the concerns raised by unabated rise in virus infections. Globally the US monthly employment report and domestically the PMI survey, seemed to indicate that the worst of the lockdown economic impact is over. However, any extension or resetting of lockdown measures, due to increasing infections, could negate the gains. Progress of a vaccine trial also added to the optimism. In Spite of improving economic data, markets are still largely moving on hope rather than on any real change in the ground realities. With intraday volatility increasing, investors are advised to remain cautious.
Some technical indicators are reaching overbought zones on lower time frame charts. Hence, unless Nifty registers a strong close in the next trading session, the said index shall slip into sideways zone with negative bias for rest of the week.
However, if it sees a negative close below 10562 level, then it can eventually drag the index down towards 10409.
Traders should remain neutral on the index while shifting focus to stock specific opportunities.
Except Bank and metal other sectoral indices ended in the green. Midcap and Smallcap indices ended higher.