The domestic equity market witnessed another remarkable session on Friday. After trading quiet and rangebound during the first half of the day, the index saw a sharp upmove in the second half and ended at yet another lifetime high.
Before closing 77.70 points, or 0.72 per cent, higher at 10,894, the Nifty50 hit another milestone at 10,900. However, the 10,793 level stood as its intraday low of the session.
During the process, the index formed a strong bullish candle on the daily as well as weekly charts. The Nifty50 managed to close above the upper Bollinger Band on both daily and weekly charts.
This portrays great possibility of the uptrend continuing, but the overbought nature of the lead indicators will require market participants to remain vigilant at higher levels, said Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory.
"Going into next week, we expect the market to remain volatile but trade with a positive bias," he said.
On further movement of the benchmark index, Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory, Chartviewindia.in, said Nifty needs a breakout above the four-month-old ascending channel, which should throw up bigger targets for the index going forward. On such a breakout, initially a modest target of 11,100 looks certain, he said.
Going into a truncated week, as the market will be closed on January 26 for a public holiday, market experts expect some profit taking at higher levels in the coming sessions.
"Technical oscillators are in deep overbought zone, and profit booking can't be ruled out in the next trading session. Traders are advised to book profit by taking advantage of the initial euphoria, if any, on Monday and maintain a tight stop loss below 10,790 level on a closing basis. They should look for higher targets in case of any breakout," said Mohammad.
On the options front, maximum Put open interest (OI) stood at 10,500 followed by 10,700, while maximum Call OI was at 11,000 followed by 10,800. Significant Put writing was seen at strike prices 10,800 and 10,700, which shifted the support on the higher side whereas Call unwinding was seen at all immediate strike prices.
The option band signifies a trading band between 10,800 to 11,000 levels, said Chandan Taparia, Derivatives and Technical Analyst, Motilal Oswal Financial Services.