The Nifty 50 recovered from early losses on Monday after finding support near its 100-day moving average, but the index remains locked within a trading range that has held since July 8. A sustained move above 24,300 is needed to strengthen the recovery and revive the broader uptrend, while the 24,000-24,074 zone remains the immediate support area.
The index opened lower after renewed military tensions between the U.S. and Iran over the weekend weighed on sentiment. Concerns also increased after Tehran said it had shut the Strait of Hormuz. Despite the weak start, the Nifty erased losses, climbed above the previous session's high and ended at 24,211, up 4.10 points, or 0.02%. The benchmark recovered more than 200 points from its intraday low and extended gains for a third straight session, helped by strength in information technology stocks.
The recovery has produced a bullish candlestick, but the index continues to trade within the range of the large bearish candle formed on July 8. At the same time, Bollinger Bands have flattened, indicating the absence of a clear directional trend. The broader trading range remains between 23,785 and 24,531.
24,300 Remains Key Resistance
The July 8 high at 24,300 is the immediate hurdle for the Nifty. A sustained close above that level could lift the index towards the 24,480-24,530 resistance zone. A breakout above 24,531 may extend the advance towards 24,602.
On the downside, the 24,000-24,074 zone remains important because both the 20-day and 100-day moving averages are clustered around those levels. A sustained move below that support area could drag the index towards 23,785, the lower end of its current range. As long as the index holds above the June 15 gap area, the broader trend is likely to remain positive.
Momentum Signals Stay Mixed
Momentum indicators have yet to confirm a decisive move. The MACD and signal lines are moving almost parallel, suggesting weak momentum, while the daily Relative Strength Index is hovering near 56 and has flattened. That indicates the benchmark could continue to consolidate until it breaks out of the current range.
Stock to Watch: Coforge
Coforge is approaching a potential breakout after trading in a consolidation range for nearly two months. The stock formed a bullish candle on Monday alongside higher trading volumes, signalling renewed buying interest.
The stock is trading above its 20-day, 50-day, 100-day and 200-day moving averages, while the moving average ribbon continues to trend higher. Technical indicators also remain supportive. The MACD has produced a fresh bullish crossover, the 14-period daily RSI has moved into bullish territory, the Stochastic RSI points to improving momentum and the Elder Impulse System has formed a bullish bar.
A sustained move above the Rs 1,545-Rs 1,548 resistance zone could confirm the breakout and open the way for a move towards Rs 1,605 and Rs 1,640. The suggested stop loss is Rs 1,497.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.