August 31,2020 Nifty50 looks strong; action likely in financials, midcaps

Nifty marched higher at the very start of the new derivative series. August F&O series had ended on a buoyant note, and the September series started on a strong note too. Nifty opened on a positive note and got stronger by afternoon as it marked the day’s high point. After that, the index remains rangebound, maintaining the gains.

From a technical perspective, Nifty has filled up the gap that existed in the 11,430-11,500 zone, and this is an important development. For the near term, any consolidation should find support near this zone. With Nifty now firmly placed in a Rising Channel, the probability of its testing the upper trend line has risen considerably.

The global risk-on, which is being fuelled by a gush of liquidity, is also very much in place. This will do what it takes to push equities higher.

With Nifty bouncing off and rallying over the past several days, it has shifted its supports higher to its 20-DMA, which is currently placed at 11,315 for the immediate-short to medium term. Nifty has added to its fresh longs, as F&O data suggested 4 percent net Open Interest addition to Nifty futures. We expect financials and midcaps to put up a resilient show. Among the other frontline stocks, defensives are likely to consolidate. We recommend chasing the momentum carefully while adopting ..

Nifty Bank (23600) The enhanced target is 23682 as long as 23194 holds’ the Nifty Bank unfolded as expected and achieved our target and has closed in the green but it looks a bit stretched but I would maintain that Nifty Bank is still up as long as 23194 holds…

Nifty (11559) Target of 11661 is still valid as long as 11440 holds’ the Nifty opened with a bull gap 11600 and traded down to close in the green…technically now 11661 is still the target as long as 11440 holds…but I am not uncomfortable…

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