On November 6, the Nifty 50 surged 494 points, or 2.01 percent, to 25,030, while the Bank Nifty jumped 1,312 points, or 2.27 percent, to 59,086. However, market breadth remained negative, with about 2,110 stocks declining against 1,186 advancing stocks on the NSE.
Jatin Gedia, Technical Research Analyst, VP, Derivatives & Technical Research at Teji Mandi
Nifty has completed its wave 4 consolidation at the October low of 22,179.90 in the rally that began from the March 2020 bottom of 7,511. The index has likely entered wave 5, which has a projected target of 32,700–32,800 over the next 18 months. This is based on the equality target of wave 1 in both price and time.
Nifty rallied 8.58 percent during the past week and formed a strong bullish Marubozu candle on the weekly charts. It closed above the 200-day EMA at 23,921.72 and the anchored VWAP from 26,373 at 24,075, indicating a breakout above key long-term resistance levels. The breakout was also accompanied by the highest trading volume in the past 22 weeks.
Typically, breakouts following wave 4 consolidations are characterised by strong price action and high volumes. Both these conditions were evident last week, further reinforcing our bullish stance.