By VK Sharma
The Nifty rallied 4.48% during the holiday-truncated week, closing at 23,851 on Thursday. This marks the benchmark’s highest weekly percentage gain since February 5, 2021.
To better understand what might lie ahead, let’s first revisit the events of not just the past week, but the entire fortnight.
As expected, markets fell sharply on April 7, when Chinese markets reopened after their New Year holiday. The Nifty dropped 1,161 points from its April 4 close. After brooding over the spilled milk for a couple of hours, it then began a rally that continued well into Thursday last. From the low of 21,743 on April 7, the Nifty surged 2,108 points to close at 23,851. It now stands 947 points higher than its April 4 close.
The rally was fuelled by a range of factors, but was primarily driven by chatter around tariffs. The RBI’s accommodative stance also provided support, and the currency appreciated
Now look at the adjoining daily candlestick chart. Pay attention to the trendline number 51, which is formed by joining the high of 23,807 seen on 5th February and the high of 23,869 seen on 25th April. The rightmost candle depicts the trading of Thursday, the last trading session of the week gone by. The Nifty saw a high of 23,872 on this day. Since the trendline no 51 is an upward sloping trendline, the asking level of this trendline is 23,896 for Monday. Once significantly crossed on a closing basis, this becomes the new support line.
Now, take another close look at the trading on April 7. While the Nifty hit an intraday low of 21,743, it closed significantly higher at 22,161. If we were to plot a line chart using closing values, it becomes evident that the Nifty has formed an inverted head and shoulders pattern, with the April 7 close marking the right shoulder.
This opens the possibility of the Nifty re-testing levels of 25,650 levels.
Also to be remembered is that the Nifty, in its current sprint, has left quite a few gaps, which could be refilled. These gaps can act as support should the markets decide to take something more than a breather. The largest of these gaps, is between 22,923 (high of April 11) and 23,207(low of April 15).
The Bank Nifty narrowly missed its all-time high, falling short by just 60 points, or 0.1%. Some Nifty constituents from the financial and telecom sectors have touched new highs. As FIIs realise that India’s exports to the US, as a percentage of GDP, are significantly lower than those of other emerging economies, there is little reason for them not to view India as an increasingly attractive destination
(The author is a veteran with over three decades of experience in capital market)
Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.
