Tech View: Nifty sustains above 21-EMA. Here are cues for Wednesday’s trade

Indian headline indices gained for the third straight session on Tuesday led by heavyweights HDFC Bank and Reliance Industries (RIL), which were the top contributors to the index. While the S&P BSE Sensex settled at 80,845.75, up by 598 points or 0.74%, the broader Nifty50 closed at 24,457.15, higher by 181.10 points or 0.75%.

The Indian equity markets started the day on a firm note and continued its upward stance throughout the session, Osho Krishnan, Senior Analyst (Technical & Derivatives) at Angel One said he could see the market breadth clearly shifting to the bullish trend, indicating an overall positive sentiment among investors.

“On the technical front, the benchmark index has evolved above the 50 DEMA after a long haul and is now placed above all its significant EMAs on the daily chart structure, which construes a strong development. Additionally, as the Nifty index gradually inched higher, it is now headed for a critical blockade placed at 24,500, which is likely to be seen as the make-or-break zone for market sentiments. A decisive breakthrough at this point may indicate a trend reversal, potentially leading to a continuation of the primary bullish trend and movement toward 24,800," Krishnan said.

What should traders do? Here’s what analysts said:

Jateen Trivedi, LKP Securities

Nifty witnessed another day of bullishness as the index moved above the 38.20% Fibonacci retracement level of the previous decline from 26,277 to 23,263. Additionally, the index has broken out of the recent consolidation phase on the daily chart, indicating a rise in bullish sentiment. Furthermore, Nifty has been sustaining above the critical 21-day exponential moving average (21EMA), reinforcing optimism. The sentiment is likely to remain in favour of the bulls as long as the index sustains above 24,400, with the potential to test levels of 24,600–24,700. On the downside, a fall below 24,400 could trigger a correction towards 24,150.

Jatin Gedia, Mirae Asset Sharekhan

Nifty opened gap up and traded with a positive bias during the day to close with gains of 181 points. On the daily charts, we can observe that the Nifty has closed above the crucial resistance zone of 24,320 – 24,350, which is a bullish sign. We expect the positive momentum to continue towards 24,770. On the downside 23,900 - 23,870 is the crucial support zone.

Hrishikesh Yedve, Asit C. Mehta Investment Intermediates

Nifty opened on a positive note, but after initial volatility, the index resumed bullish momentum and concluded the day on a positive note around 24,457 levels. The volatility index India VIX dropped by 2.22% to 14.37, indicating a decrease in market volatility.

Technically, on the daily chart, Nifty has witnessed a breakout of an Inverted Head and Shoulder pattern, indicating strength. Furthermore, the index crossed both the 100-Day exponential moving average (DEMA) hurdle (24,310) as well as 50-DEMA hurdle (24,370) and closed above them, indicating strength. On the upside, 24,550 will act as immediate resistance for the index. If the index sustains above 24,550, the upward move could extend towards 24,700-24,800 levels. As long as the Nifty remains above 24,300, traders should adopt a buy-on-dips strategy.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)