The Nifty 50 closed higher on Thursday after recovering from lower levels, forming a higher high and higher low pattern for the first time in four sessions. Buying at lower levels helped the index erase early weakness and end the day up 277 points, or 1.18%, at 23,689.60.
The index opened with a gap-up but failed to hold initial gains after facing resistance near the previous session's high. It later slipped close to the prior day's low before recovering through the session. The Nifty moved above the May 12 high, tested the eight-day exponential moving average and partly filled the gap created on May 12. Profit booking emerged at higher levels before the close.
Market breadth remained positive within the Nifty 50 and across the broader market. Most sectoral indices ended higher, except Nifty IT. Nifty Pharma and Nifty Metal led gains, with both indices rising more than 2% and touching fresh record highs.
Morning Star Pattern
The Nifty formed a Morning Star-like candlestick pattern on the daily chart, a formation generally seen as a bullish reversal signal that may indicate recovery from lower levels. The index has also moved back inside the Bollinger Band, according to the previous technical setup.
Despite the rebound, the index continues to trade below key moving averages. The 50-day moving average remains in a downtrend, while the 20-day moving average has also started moving lower. The 14-period relative strength index rebounded after taking support near the 40 level, while the moving average convergence divergence line remains below the zero mark.
Key Levels
The Nifty needs to hold above Thursday's high of 23,777 for the recovery to continue. A sustained move above that level may push the index towards the 50-day moving average near 23,836, a key resistance level for regaining upward momentum.
A weekly close above the 50-day moving average may extend the rebound towards 24,074, where the 20-day moving average is placed. The 24,074 zone has acted as resistance earlier as well. On April 10, the index faced resistance near that level before moving above it with a gap-up opening on April 15.
On the downside, immediate support is placed at 23,420, followed by the recent swing low of 23,262.55. The pullback may continue as long as the index remains above 23,420.
Ipca Laboratories Near Breakout As Volumes Rise
Ipca Laboratories is nearing a breakout from an ascending triangle-like pattern on the weekly chart, with rising volumes indicating increased market participation.
The Rs 1,590-1,600 zone has acted as a resistance level, creating a horizontal trendline, while the stock has continued to form higher lows. The pattern points to accumulation at lower levels.
Within the broader ascending triangle structure, the stock has also formed a pennant-like pattern, which may indicate a pause before a continuation move.
So far this week, with one trading session remaining, the stock has recorded NSE volumes of 18.35 lakh shares, the highest weekly volume in the past five months. Volumes are also above the 10-day and 30-day averages.
Technical Setup
On the daily chart, the stock is trading above all key moving averages, with the averages aligned in a positive sequence. The daily moving average convergence divergence indicator has given a bullish crossover, while the 14-period daily relative strength index has moved above the 60 level and continues to rise.
A sustained move above the Rs 1,595-1,600 zone may confirm the breakout and could push the stock towards Rs 1,708-1,754 in the near term. On the downside, Rs 1,490 remains the stop-loss level.
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