What a day! Nifty gappup up, sold off, rallied and broke day high, sold off and broke day low and then rallied to break day high again. In the end, a strong positive close at 5845 near the day high and very close to the 200-SMA. There were volumes on both sides through out the day, and it was evidently a tug-of-war between the bulls and bears with the bulls coming on top today. Now bulls need to follow-up once more and get the weekly close above 5850 to confirm the bullish scenario. A close above 5900 will ofcourse be fantastic!
Banknifty followed Nifty but the strength was missing. While Nifty close strongly near the day high, Banknifty closed almost 0.5% points lower from the day high at 11,440. SBI made a new low 6-month low but recovered and closed above 1900 once again. Banknifty futures need to cross 11,500 and close above it while the spot needs to close above 11,460 for the momentum to shift upside.
CNXMIDCAP too had a seesaw day between the important support region of 7300 and 7400, and closed indecisively at 7360. After the initial sell-off the momentum changed towards upside and the ADAG group looked very strong. RELCAPITAL, RELINFRA and RCOM broke previous highs but could not sustain. We should expect follow-up buying today if Nifty sustains above 5840.
The hourly charts have changed from being overbought to neutral now. Nifty should have a good opening due to strong global cues coming from ECB and Bank of England. Short covering during the second half is possible due to Friday being a weekly close. A close above 5850 will be strong and CNXMIDCAP and BANKNIFTY closes above 7400 and 11,450 (spot) will provide confirmation of strength.