Profit booking emerges at higher levels; Bank Nifty plunge 500 points from days high, volatility rears its ugly head
Update:Indian markets witnessed a jubilant start on Thursday and subsequently, extended gains with Nifty & Sensex reclaiming their important psychological marks of 15,000 and 50,000, respectively.
However, profit booking emerged at higher levels as Nifty trimmed almost 100 points from the day’s high within a span of 15 minutes.
Among sectoral indices, the majority of the sectoral indices were trading in green with Nifty Metal and Nifty Energy being the top gainers. On the other hand, Nifty Media and Nifty PSU Bank were the top losers. An important observation is that Bank Nifty is down by almost 500 points from the day’s high, which holds a significant weightage in Nifty index.
India VIX is back in green thereby, indicating that volatility is rearing its ugly head. Going forward, the level of 14,880 can be an important level to watch out for on the index.
Nifty extended gains for the third consecutive session and settled near its three-week high, ahead of the expiry of April derivative contracts. It remained upbeat from the word go, amid superior Q4 results and vaccine optimism.
Nifty formed a bullish candle carrying higher high & higher low, indicating follow-through strength. In the price, the index reclaimed 50-DMA and closed above it after almost nine trading sessions, indicating rejuvenation of upward momentum. In addition to this, the index closed above the upper band of the falling channel, which was placed around 14,800-14,830 level.
The index has gained just over 5 per cent from last Thursday’s low and now, the index has reached a crucial juncture as the zone of 14,880-14,990 is a crucial resistance zone. The level of 14,880 is an important resistance because, in the past, the index has turned down from this level not once but multiple times. Hence, a decisive breach above the 14,880 would open gates for further upmove in the near term. And most likely, this time, the bulls would pierce the level of 14,880 as the current upswing is the sharpest one as compared to the previous two swings, and it has not moved in a zig-zag manner.
Given that the index is currently placed above all its important moving averages and the MACD has shown a positive crossover, the RSI has marked a new 14-period high, which is a bullish sign. Further, improving the market breadth, FIIs turned net buyers for the first time during the week and across sector participation, highlights inherent strength that augurs well for the index to march towards the important psychological mark of 15,000.