Tech View: Nifty vulnerable to profit taking, upside capped at 11,800

NEW DELHI: Nifty50 on Wednesday jumped for the fifth day in a row and formed a higher high and low. On the daily chart, the index formed a bullish candle. It was not far away from the recent swing high of 11,794 hit on August 31.

That said, the broader market is showing clear signs of fatigue and Nifty50 itself looks overbought on the short-term charts. The index needs to clear the 11,750-800 range for any further rise towards the 12,000 mark, analysts said, adding that a failure to do so may trigger profit taking.

The NSE barometer has an immediate hurdle at 11,800, said Rohit Singre of LKP Securities, who said a move above 11,800 level would pave the way for the 12,000 mark. The analyst sees strong support for Nifty50 in the 11,660-11,600 range.

For the day, Nifty closed at 11,738, up 76.45 points or 0.66 per cent.

Aditya Agarwala, Senior Technical Analyst at YES Securities, said the index is on the verge of a breakout from the crucial resistance at 11,750, which happens to be the recent peak and the previous cluster of peaks.

"A successful breakout from this resistance cluster will extend the rise to 12,050 level. However, a failure to break out and sustain beyond the strong resistance at 11,750 level can trigger minor profit booking and drag Nifty lower to 11,625-11,550 levels. Already, the RSI indicator has reached the overbought zone on the shorter time frame chart, suggesting a temporary pause in the uptrend," Agarwala said.

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Mazhar Mohammad, Chief Strategist at Chartviewindia.in, said the index may remain rangebound on Thursday with the upside capped at around 11,794 level. "Though there is no immediate threat of a short-term correction, more weakness can be expected if Nifty closes below the 11,629 level," he said.