The Nifty is poised for a gap-up opening on Monday, buoyed by a favorable exit poll forecast for the BJP and robust Q4 GDP data released on Friday.
“Nifty could open at 23,100+ due to several positive factors,” said Shilpa Rout, Head of Derivative Research at Prabhudas Lilladher, highlighting the exit poll numbers, GDP data, timely arrival of the monsoon, and strong GST collection numbers.
Record High Expected
Fundamental triggers aren’t the only factors in play; technical indicators also suggest a bullish outlook.
“Foreign Portfolio Investors (FPIs) are short by 3 lakh contracts, an all-time high, while domestic long positions in Nifty are also at record highs,” noted Rout. Chandan Taparia, Head of Derivative Research at Motilal Oswal Financial Services, is similarly optimistic about Nifty reaching a record high soon.
“Nifty has formed a higher base, and volatility is likely to fall from peak levels,” Taparia said, predicting the index would open higher and hit new lifetime highs soon.
Short Covering
“FIIs’ positions indicate more players are short than long on the market,” said Ruchit Jain, Lead Researcher at 5paisa.com.
“Historical data shows similar positions on 22nd March 2023 (92% short positions), 29th September 2022 (87% short positions), and 16th June 2022 (88% short positions). Each time, FIIs had to cover their positions, sparking a Nifty rally that registered new highs,” Jain explained.
Some of these positions might be hedges against portfolios, Jain noted, adding that covering these shorts could lead to a short-term uptrend. “Domestic participants’ positions seem bullish, and any positive reaction to the results may fuel the rally,” he said.
Key Nifty Levels
Jain identifies 23,000-23,100 followed by 23,400 as the key near-term resistance levels.
On the downside, 22,400-22,300 is the immediate support zone followed by 22,000, according to Jain.
Nifty has retraced almost 0.5 percent from its recent high and has crucial support near the 22,400 zone, around the 50DMA level. On the upside, it faces hurdles at the 22,800 and 23,000 zones.
According to Shilpa Rout, these hurdles need to be breached for the trend to improve and confirm a breakout, paving the way for a further upward move to the 24,000 level.
