Nifty50 index likely to scale 16,000 in Q2, say technical analysts

Experts said the performance of banking and energy stocks, mainly Reliance Industries, will be the key for the market to hold on to current levels

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stock market | Nifty50 | technical analysis

The benchmark Nifty50 index hit a fresh high for a second day in a row on Friday, closing at 15,435.65. Analysts believe the index could head towards 15,600 in the near term as many technical indicators are currently flashing positive signals.

However, given the sharp rise over the past two weeks, investors need to keep a close watch on key support levels such as 15,400 or 15,350.

“We may see more upside in the near term if index manages to hold above 14,350, immediate support is near 15,400-15,350 and immediate hurdle 15,500-15,600 zone,” said Rohit Singre, senior technical analyst, LKP Securities.

MarketSmith India in a note said the Nifty will remain in a “confirmed uptrend” as long it manages to maintain its 50-day moving average (DMA) which is around 14,762. “If the index fall breaches its key moving averages, we may change the market status to an ‘Uptrend Under Pressure’,” it said.

Experts said the performance of banking and energy stocks, mainly Reliance Industries, will be the key for the market to hold on to current levels.

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“The expected levels of the market are likely to be in the range of 15,250 and 15,600. The momentum indicators like RSI (relative strength index) and MACD (moving average convergence divergence) indicate potential upside from the current market level,” said Ashis Biswas, head of technical research, CapitalVia Global Research.

The RSI for the market is currently in the mid-range of around 66. A breach of 70 is considered to be a bearish signal as it indicates that the market is overbought. Similarly, the MACD, considered a momentum indicator, is giving a bullish reading.

Meanwhile, analysts have also come up with a medium-term target of 16,400 for the index. They say another 6 per cent upside from the current levels will be driven by stocks in the financial, consumer goods, and automobile space.

“The target of 16,400 over the next quarter will be led by BFSI, consumption, auto and infra. In the process, we do not expect the index to breach the key support threshold of 14,600. Thus, dips should be capitalised on to accumulate quality large- and mid-caps,” said Dharmesh Shah, head-technical, ICICI Direct.

Experts said the markets next week will take cues from the Reserve Bank of India’s policy meeting, where the central bank is widely expected to maintain an accommodative stance.