Nifty50 index extended its gains to the third consecutive day, as it added 53.95 points on Thursday to close above the 200-day moving average at 10,791.
The index opened the day at 10,810 against the previous close of 10,737 and hit an intraday high and low of 10,838 and 10749, respectively. In the process, it formed a small bearish candle on the daily chart, showing signs that the strong run may be losing steam.
“A small negative candle was formed on Thursday at the swing high of 10,838 with minor upper and lower shadows. Technically, this suggests those with long positions need to be cautious at higher levels. Some consolidation or minor profit booking is likely in the short term, before Nifty notches up further gains,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory, said Nifty formed a small black body in Thursdays trade, which resembled a kind of a Spinning Top. Such formations occur when market participants turn indecisive at higher levels.
In this pullback rally from the lows of Tuesday, the 50-share index advanced has over 450 points till now. India VIX declined 3.24 per cent to 15.29. It has seen a sharp cut of 25 per cent in last three sessions, which suggests the bulls are holding a grip on the market, signalling limited downside.
In the coming session, Vaishnav expects the market to remain tentative and Niftys high of 10,838 will pose a resistance in all probability. “On the lower side, Niftys behaviour against the 200-DMA at 10,754 will be important. In all likelihood, the market will remain tentative and continue to consolidate at higher levels,” he said.