Overbought Indian stocks continued to rise on the last day of the week as they ended another day with gains.
After a quiet start to the day, the headline index Nifty largely consolidated as it posted gains twice during the day to test the previous close levels. Though it looked like a range-bound consolidation in the index could be taking place, the market gained momentum in the last one-and-a-half hours of the session. Nifty surpassed the crucial 17,300 level and ended with a net gain of 89.45 points or 0.52 percent.
The market is clearly overbought on the daily chart, making range-bound consolidation almost imminent. However, F&O data continues to show underlying strength and short-term bounce. In the current week, not only is put unwinding taking place at 17,200-17,300 levels, but fresh call writing has also taken place at 17,500 levels. This indicates that the index is trying to move up some more space. Volatility continued to rise as India VIX closed 2.12 percent higher at 14.5425.
With a slightly positive start to the day expected, the 17,400 and 17,465 levels are likely to act as potential resistance points while Nifty may remain in the unknown territory. The index may find support near 17,265 and 17,180 levels. The trading range for the market is likely to remain wide in the coming days.
The pattern analysis of the daily chart shows that Nifty is trading in unknown territory. After a major breakout above the 15,900-15,950 zone, the index continued to trade higher with slight consolidation for a few days. In the process, it kept pulling support levels higher. In the immediate short term, 16,600-16,800 is a key short-term support area for the market if broader consolidation occurs.