Nifty trend for Wednesday

Nifty closed higher for the fifth straight session on Tuesday, extending a robust rally, which was led by the banking and financial stocks. Nifty opened the session higher and thereafter, it moved in a range of 100 points for the entire day, and ended above the level of 13,900 for the first time ever.   

The price action of the day formed a small body candlestick pattern with shadows on either side. The rise was on a negative market breadth and uptick in India VIX, indicating that the volatility is surging before December derivative expiry. Even though the market closed higher, the momentum is still waning. At the same time, there is no significant weakness visible in any timeframe. The price did not close below the prior bar low even on the hourly chart. The only thing clearly visible is that the momentum is lagging.  

Tuesday’s upmove was mainly powered by the banking & financial stocks as 4 out of 5 stocks, which contributed to the day’s gain, were from these two sectors. On a YTD basis, Bank Nifty is still down by 2.6 per cent whereas, Nifty, on a YTD basis, is up by 14.50 per cent. So, Bank Nifty has a lot to catch up with Nifty and this makes us believe that Bank Nifty would continue to outperform in the coming days.   

Talking about the support levels on the downside, Monday’s gap area of 13,771-13,811 is likely to act as a cushion in case of any dip or correction. While on the upside, the level of 14,000 would continue to act as a resistance level.