HDFC Securities says that Indian equity benchmark indices rose for the fourth straight session, spurred by positive global sentiments. At close, the Nifty 50 index ended 1.78% or 211.8 points higher at 12,120. The Nifty is 38 points away from turning positive for 2020. The Sensex turned positive for the year, surpassing the level of 41,253.
Volumes on the NSE were just above the recent averages. Among sectors, Metals, Media, Bank, PSU, FMCG, I.T. and Auto indices were the main gainers.
Investors across the globe appear happy that there may not be a “blue wave” outcome in the U.S. elections, as seen in the rally in world markets. If Republicans hold the Senate, they will want to stop what they see as the Joe Biden “spending agenda” and “runaway federal debt,” which will mean less fiscal stimulus and no corporate tax increases. A divided U.S. Govt is likely to be a favourable outcome for most asset classes.
The Bank of England meanwhile held interest rates at 0.1% and extended the size of its quantitative easing program by £150 billion as it forecasts the U.K. economy to contract in the fourth quarter.
Nifty crossing the recent high with a gap up and a very positive advance decline ratio mean that a fresh upthrust could have begun. Nifty could face resistance at 12246 and 12430 on the upside while 12018-12025 could provide support in the near term.
After showing a sharp upside bounce on yesterday, Nifty witnessed an excellent follow through up move on today and closed the day higher by 211 points. A reasonable positive candle was formed with gap up opening and the opening upside gap remains unfilled.
After opening on an upside gap of 154 points today, Nifty shifted into a narrow high low range for the whole session and made an attempt to inch up further towards the end to close near the highs. Technically, this pattern could mean an uptrend continuation and the unfilled opening upside gap could be considered as a bullish breakaway gap. This is a positive indication and more upside could be in store in the short term.
HDFC Securities observed a sustainable upside breakout of the hurdle of previous swing highs around 11950-12025 levels, which coincided with a down sloping minor trend line. This also indicates an upside breakout of the recent broader range movement of the market.
Positive sequential movement like higher tops and bottoms continued on the daily chart and some more upside from here could open a chance of a new higher top formation at the highs. The next important resistances are placed at 12250 and next 12430 levels, which could offer key resistance for the market on the higher side.
Conclusion: The short term trend of Nifty continues to be positive and one may expect further upside in the market for the short term. Having showed an upside breakout of the key resistance, the Nifty could encounter the next crucial resistances of around 12250/12430 levels in the near term. Immediate support is placed at 12000-12050 levels.
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