The Nifty 50 ended higher on Monday after a sharp gap-up opening, although gains moderated as the session progressed and profit booking emerged at higher levels.
The benchmark index opened 362 points higher following reports of a peace deal between the US and Iran. However, the early momentum faded, with the market moving within a narrow range for most of the day. The Nifty eventually settled 231 points, or 0.98%, higher above the 23,850 mark, finishing near the day's low and about 150 points below its intraday peak.
The move left the index above both its 50-day moving average and the falling trendline drawn from the April 21 high. While the broader structure remained supportive, the session also reflected caution after the recent rebound.
Profit Booking Emerges
Despite ending in positive territory, the Nifty formed a red-bodied candle after closing below its opening level, indicating selling pressure at higher levels following the initial surge.
The index traded within a 194-point band, its narrowest daily range in four sessions, and finished near the lower end of that range. It nevertheless remained above the previous session's high, while the opening gap was only partially filled. According to the note, this suggests that the short-term structure remains intact, although further confirmation is needed.
Technical indicators also pointed to improving momentum. The Nifty traded around 0.44% above its 50-day moving average. The MACD generated a fresh bullish signal, while the RSI stood at 56.33 and moved above its earlier swing high.
Resistance In Focus
The 24,090-24,127 zone has emerged as the next hurdle after the index rebounded nearly 4% over the previous three sessions.
The range coincides with an earlier gap zone and a previous swing high. A close above these levels would confirm a higher high and could support further gains. The note said the short-term trend remains favourable as long as the Nifty holds above its 20-day and 50-day moving averages. However, it added that a decisive move above the earlier swing high is required to reinforce the breakout.
On the downside, the 50-day moving average near 23,749 has become an important support level. A close below that mark could weaken the breakout above the falling trendline and raise the possibility of a false breakout. If that level fails, the next support is seen around the 20-day moving average near 23,548.
The note said volatility could remain elevated on Tuesday amid the weekly expiry of Nifty derivatives contracts.
Stock To Watch: Eicher Motors
Eicher Motors has broken out of a 13-week triangle pattern, supported by higher volumes and price action, according to the note.
The stock closed above the 61.8% retracement level of its earlier decline, while trading volumes reached their highest level in the past 11 sessions. Its Relative Strength line stood at 75 and continued to rise, indicating that the stock was outperforming the broader market. It was also trading 7.02% above its 50-day exponential moving average.
The note said Eicher Motors had closed above its moving average ribbon, while Bollinger Bands had begun expanding. The MACD remained above the zero line with a bullish signal, and the 14-period daily RSI had moved into bullish territory.
It added that the Know Sure Thing indicator had generated a fresh bullish signal, the Stochastic RSI remained positive and the Elder Impulse System indicated a supportive setup.
"A sustained move above Rs 7,630 can strengthen the breakout and open the way for a potential move towards Rs 8,260 to Rs 8,400," the note said. "On the downside, Rs 7,060 should be maintained as the stop loss."
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