Analysts are positive on the index prospects, but were quick to point to that Wednesday’s advance-decline ratio was skewed in favour of the bears. Besides, the index saw some profit-taking around the 16,300 level, which was deemed as immediate resistance for Nifty. Analysts do not rule out any short-term fall, but said any decline should be bought into.
“A total of 32 out of 50 Nifty stocks closed in the negative territory, as financials single-handedly lifted the benchmark index. Going ahead, Nifty needs to sustain above today’s gap zone of 16,176-146 to retain the positive bias. If the bulls manage to defend the said support, a higher target towards 16,700 can be expected. However, a close below 16,146 level may trigger profit booking in the short term,” said Mazhar Mohammad of Chartviewindia.in.
For the day, Nifty closed at 16,258, up 128 points or 0.79 per cent.
Anand James, Chief Market Strategist at Geojit Financial Services, said a parallel consolidation ensued through the day, which indicates that the bulls were exhausted after lifting Nifty by over 500 points from Friday’s close.
“Nevertheless, the patterns are yet to show any weakness, and the target of 16,350 continues to be in play. However, mean reversion studies suggest Nifty may consolidate near the 16,200 level before making a run beyond 16,480 level. One must note that NSE500 stocks trading above 5-day and 10-day averages continued to dip as Nifty surged, which suggests traders yet to come out of the risk-off stance taken all through the fortnight. Once they catch up, there would be broadbased buying,” James said.
Independent analyst Manish Shah said any small pullback towards the 15,960-16,000 zone is going to be an opportunity to buy the market.
“An interesting thing to note is that the midcap index saw a bearish candle, whereas Nifty50 made a long bullish candle. Is the Nifty Midcap index signalling something important? We will wait for a few days and observe,” Shah said.
