Nifty breaks out of inverse head & shoulders pattern; NFL & RCF log double-digit gains
Update: Indian markets witnessed a flying start with Nifty and Sensex reclaiming their important psychological levels of 14,900 and 50,000, respectively. All the sectoral indices were in the green with Nifty Metal and Nifty IT leading from the front.
On the stock-specific front, National Fertilizers Limited (NFL) and Rashtriya Chemicals & Fertilizers Limited (RCF) have logged double-digit gains in the initial hour of trade along with a massive jump in volumes.
Nifty started off the session in positive terrain and in jiffy, it went down to touch an intraday low of 14,649.85. Thereafter, it bounced back from the lower levels and established a bullish trending bias, aided by RBI Monetary Policy outcome as a lot of banking stocks witnessed a sharp rebound. In the process, Nifty moved beyond the 14,850 mark and it was within the striking distance of achieving the neckline breakout of inverse head & shoulders pattern, which is placed at 14,880. However, in the latter part of the session, Nifty cooled off a bit and closed above the 14,800 levels.
The price action of the day has formed a bullish candle, carrying higher high & higher low as compared to its prior bar. Nifty has now reclaimed its 20 and 50-DMA, which is a positive sign for the bulls. However, in the last couple of weeks, Nifty reclaimed its 50-DMA for the fourth time along with 20-DMA for the third time. Having reclaimed its important moving averages in the previous instances, Nifty has not seen any kind of follow-up buying. Hence, going forward, it is crucial that follow-up buying emerge, or else it would be a repeat of the previous instances.
Talking specifically about the levels, the level of 14,880-14,900 is likely to act as immediate resistance while on the downside, the level of 14,740 may act as immediate support. A decisive breakout above the 14,880-14,900 levels would open gates for 15,000-15,330 in the near term. Meanwhile, a breakdown of 14,740 would only mean that we would again go on to test the lower end of the range i.e. 14,450.