Where is Nifty headed after touching record high: Check out levels

The benchmark index has reached its all-time high following the BJP’s smooth victory in the assembly elections in Madhya Pradesh, Chhattisgarh and Rajasthan on December 3. At the close, the Nifty 50 surged by 419 points to 20,687.

Looking ahead, analysts expect the Nifty to open with a gap up of 50-60 points on December 5, with near-term sentiment remaining bullish above 20,400 levels, and the index expected to move toward 21,000 levels.

Rupak De, Senior Technical Analyst at LKP Securities, stated, “The Nifty kicked off with a gap up, propelled by BJP’s exceptional performance in the state election. Technically, the Nifty had already surged past the critical resistance level of 19,850. Since then, there has been a significant shift in Put positions towards higher strike prices, foreseeing a robust upward rally shortly. The overall sentiment appears highly bullish until the Nifty falls below 20,400. On the higher end, the index might move towards 21,000.”

Analyst recommendation: Buy on Dips

Ajit Mishra, SVP – Technical Research, Religare Broking Ltd, stated, “On the index front, Nifty may take a breather around the 20,750 zone, and we expect the 20,300-20,400 zone to act as a cushion in case of any profit-taking. We recommend staying with the trend and utilising a dip or consolidation as a buying opportunity.”

“The Nifty managed to hold onto the gains and also built upon it, indicating that there is more steam left in the rally. On the upside, we expect it to stretch higher to 21,500. The daily momentum indicator has a positive crossover, and thus, in case of a dip/consolidation towards the support zone of 20,550 – 20,500, it should be used as a buying opportunity,” stated Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.

Overbought conditions

The Nifty is now in overbought territory, with the Relative Strength Index (RSI) at 80 – the highest level since July 2023. Mandar Bhojane, Research Analyst at Choice Broking, said, “On the daily chart, the Nifty sustained its upward momentum after a gap-up opening of 300 points, forming a robust bullish candle indicative of a strong uptrend. However, a closer examination of lower time frames, particularly the hourly charts, revealed an extremely overbought condition. A correction, either in terms of time or price, seems warranted, suggesting that one should consider entering positions on dips for a more favourable risk-reward profile.”

Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy, stated, “What’s interesting is that the India VIX also shot up by 5 percent. This huge rally has landed both Nifty and Banknifty in the overbought territory, and the market may soon see some profit booking. However, every dip should be seen as a buying opportunity as, post the state elections result, Nifty is all set for a big rally till the Lok Sabha elections of 2024.”

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