Technical Indicator Suggests Nifty Has More Room Left On The Upside

India's benchmark stock index could rise more.

Here's why: the momentum indicator Relative Strength Index shows none of the Nifty 50 stocks has been oversold for 16 sessions now. That may imply selling given that it's just one short of the 17-session oversold streak of late July after which the Nifty declined 4.5 percent. But this time, there's one key difference.

Only two Nifty stocks are overbought—Tata Steel Ltd. and Larsen & Toubro. The range of overbought stocks in last 16-sessions has been 2-5 percent. In July-August last year, the number of overbought stocks ranged from 20-25 percent.

The index could face resistance near 10,650 levels and there are no extreme positions, Mukesh Singh, head of technical analysis at Nila Financial Services, said. “It's the decennial anniversary of 2008 highs and 10,609-10,650 is the area arrived from three prior waves, and also the longer trend channel from 2009 lows runs through 10,630.”