Markets in overbought zone, avoid aggressive bets; Nifty's support at 24k

Nifty Outlook

Bulls continued their strong performance, extending their lead for the sixth consecutive week. Throughout the week, various sectors maintained optimism, while the benchmark index traded within a range.

On Friday, strong buying in the IT sector following TCS results triggered much-needed impetus pushing the Nifty to a new milestone of 24500, closing a tad above it with a 0.73 per cent gain from the previous week's close.

On the daily chart, prices are gradually inching higher with a series of small body candles observed within a range. Throughout the week, dips were bought, and the 24,150 - 24,200 zone acted as a strong support for the bulls. Conversely, the resistance around 24,450 - 24,500 was broken due to strong buying in the IT sector on Friday.

Moving forward, despite the markets appearing overbought by various measures, there are no signs of weakness, and bulls remain in control, supported by sector rotation. The ideal strategy would be a stock-centric approach, focusing on the theme of the day for better trading opportunities.

For the Nifty, close attention needs to be paid to the 24,200 - 24,150 zone. If this level is breached, it could signal the first sign of weakness, possibly reaching 24000 and below ahead of the budget. On the flip side, there is no clear resistance as prices are trading in uncharted territory. However, the golden retracement of the panic fall seen on election result day is around 24,610, which is technically significant, along with 24700, seen as key resistance levels. Traders need to monitor these levels closely.

While the TCS results triggered fresh buying on Friday, many more key results are expected, and markets are likely to be influenced by these outcomes. Traders should avoid aggressive bets and focus on these events.

(Rajesh Bhosale is equity technical analyst of  Angel One Ltd. Views expressed are his own.)