HDFC Securities highlights that the band for Nifty in the near term is 14653 - 14868

HDFC Securities says Indian equity benchmark indices ended higher for the third straight day on Feb 03 (in its best rally in 10 months) but ran into resistance at higher levels. At close, the NSE Nifty 50 index ended 1% higher at 14789.  

Volumes on the NSE were lower than the previous day but much above the recent averages. Among sectors, Pharma, PSU Bank, Metal, Auto & IT rose the most while Realty index fell.  

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Asian shares largely rose on Wednesday as governments around the world looked poised to boost spending to help economies recover from the coronavirus and vaccine roll-out programmes accelerated. European equities were on track for a third consecutive daily rise on Wednesday, while Italian assets rallied, as hopes that former European Central Bank chief Mario Draghi can bring political stability to Rome added to the positive mood.  

A gauge of India’s services sector remained steady in January, helped by new businesses. The India Services Business Activity Index, compiled by IHS Markit, stood at 52.8 in January 2021 compared with 52.3 in December.  

The Composite PMI Output Index rose to 55.8 in January from 54.9 in December. Nifty managed to register a new all time high on Feb 03, though it retreated from the highs towards the end. This raises the possibility of a bullish technical count, especially if it does not correct sharply on the succeeding day. The band for Nifty in the near term is 14868 – 14653.  

The uptrend continued in the market for the third consecutive sessions on Wednesday and the Nifty closed the day higher by 142 points. After opening on a positive note, the market slipped into intraday decline soon after the opening and filled the upside gap completely. A sustainable upside bounce has occurred in the market during the early to mid part of the session and shifted later into a range move in the mid to later part of the session.  

The new all time high formation at 14868 on Wednesday has resulted in a faster retracement of the last down swing. Recently, the market has consumed 6 trading sessions to complete its down leg, which started from the high of 14753 -21st Jan.  

Conclusion: The short term trend of Nifty continues to be positive. Having placed at the resistance zone of around 14800 levels, there is a possibility of volatility or minor profit booking from the highs of 14800-14900 levels in the short term, but eventually this hurdle is going to be taken out on the upside. Immediate support is placed at 14750.