The market has been seeing a relief rally of sorts in the past few sessions. The indices closed above the key support zone above 22,000. The question is, can the upward momentum sustain, and what are the resistance zones going forward? Here is a look at the key levels to watch out for.
Most analysts believe that the closing levels on Friday were crucial. This indicates that the markets are likely to continue the relief rally. According to Shrikant Chouhan, Head of Equity Research at Kotak Securities, if the market manages to trade above 22,300, it could retrace to the 20-day SMA or 22,750. The uptrend may continue further, potentially pushing the indices higher to 22,900/75700.
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Last week, the market formed a small-bodied bullish candle, indicating a potential continuation of the uptrend if the index surpasses immediate resistance levels. “While this suggests a pause in the bearish trend, a sustained breakout and close above the 22,800 mark could confirm a reversal, likely attracting fresh buying interest and paving the way for further upside momentum,” stated analysts at Choice Broking.
Reiterating on the same point, Ajit Mishra, Senior Vice President of Research at Religare Broking said that the Nifty 50 faces a crucial hurdle at its 20-day Exponential Moving Average (DEMA) near 22,700. “A sustained move above this level, supported by banking stocks, could push the index towards the 23,200-23,400 range.”
However, if the Nifty 50 falls below 22,300, the sentiment could change, and traders may prefer to exit their long positions,” said Athawale of Kotak Securities. A dip below 22,250 could hinder the recovery and prompt a reevaluation of the crucial support zone placed between 21,800 and 22,000, said Mishra.
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On Friday, the NSE Nifty 50 closed the session 8 points or 0.03% higher at 22,552, while the BSE Sensex fell 8 points or 0.01% to close at 74,333. While the Nifty 50 rose 1.7% last week, the Sensex added 1.9% in the last five trading sessions.
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