Nifty reclaims 12,000 mark for the first time since February, up 57% since March; can it gain more?

Nifty 50 added to its gains on Monday morning and managed to reclaim the 12,000 mark, for the first time since February 20 this year. The benchmark index zoomed on opening to trade at 11,997 levels and soon after was seen reclaiming the 12,000 mark. With this, Nifty has now managed to gain over 57% since March 23, which was when the index was at its lowest so far this year. After attaining a high of 12,430 in January, Nifty 50 dropped down to 7,500 following the coronavirus-led March sell-off across the globe. 

The index has recouped most of the losses, aided by the unlocking of the economy, heavy foreign inflows, and growing retail participation in equity markets. Corporate India has been reporting numbers that are closer to the pre-coronavirus levels which is leading the investor optimism. “The index has rallied 1150 points in just 10 trading sessions (till Friday) during ongoing up move (off September low 10790) which hauled daily stochastic oscillator in overbought territory (at 94). Thus, the possibility of temporary breather at 12000-12100 range cannot be ruled out,” said Dharmesh Shah, Head – Technical, ICICI direct in his weekly outlook. However, he cautioned that such a breather should not be construed as negative as the broader structure remains positive. “Instead, dips should be capitalized as an incremental buying opportunity in quality stocks amid ongoing Q2FY21 result season,” he added.

Technical analysts see that the support and resistance levels for the benchmark indices have moved higher now. “A hold above 11800 can move Nifty towards 12000-12200 while support has moved higher at 11750. Investors would now track earnings season which is expected to show strong sequential recovery and watch out for management commentaries on demand for the upcoming festive season,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services. 

“Nifty Open Interest Put Call ratio rose to 1.60 levels on Friday from 1.59 on Thursday levels. Amongst the Nifty weekly Options, Put writing was seen at 11700-11800 levels,” said HDFC Securities in a note. The brokerage and research firm advises investors to remain bullish. “On the higher side, Nifty is likely to find an immediate resistance in the vicinity of 12000-12100 levels where Calls have been written. Any close above 12100 would result in further short covering which might push Nifty to even 12300 levels,” the report said while advising investors to keep a stop loss at 11,700.