Chart: Nifty all set to conquer its life-time high

Special to Firstpost

CNX Nifty (6,189.35): After a dull trading in the early part of the week, a sharp recovery on Friday helped the index clear the key resistance at 6,140 mentioned last week. The breakout past this level is a bullish sign and the index now appears set to conquer the life-time high at 6,357.

The positive view would be in force as long as the Nifty trades above the recent swing low of 5,700. Until this swing low is breached, there would be a strong case for a rally to 6,357 and beyond.

From a micro perspective, the minor resistance at 6,230 is something to be aware of. A breakout past 6,230 would strengthen the bullish case scenario while a fall 6,030 would be an early warning that the bullish scenario is not at play.

A look at the index heavyweight Reliance Industries and a clutch of stocks from the banking sector, it appears as though the Nifty is primed to get past the prior highs. As always, it is essential to have a trade plan and a logical level to place stop loss.

CNX Bank Index (10,744.90): This index has been sort of trudging up since the Sept. 30 low of 9,588. There is a discernible drop in volatility over the past few trading sessions, which is a precursor to a big directional move when the volatility expands.

As long as the support at 10,100 is not breached, it would be reasonable to expect a breakout to the upside and a rally to 11,600 may materialize. A fall below 10,100 would suggest that the short-term trend is bearish and the index could then slide to the support at 9,400.

Century Textiles (Rs.268.20): The series of higher highs and higher lows recorded since Aug. 28 is a sign that the short-term trend is bullish. The sharp rally on Friday with a spurt in trading volume is suggestive of buying interest in the stock. Chart patterns indicate that the stock could rally to the immediate resistance at Rs.295-300 range.

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Investors may consider long positions in the stock with a stop loss at Rs.249 and target of Rs.295. A move beyond Rs.300 would lend further momentum to the uptrend, pushing the stock to the major resistance at Rs.325.

TCS (Rs 2,120.40): This stock has been one of the outperformers this year. The stock has been under pressure this week which has pushed the stock to a short-term support. The short-term trend is bullish and the stock could rally to the short-term resistance at Rs 2,250-2,275.

Long positions may be considered with a stop loss at Rs.2,050 and a target of Rs 2,250.

A move past Rs 2,250 would be a sign of strength and the stock could then rally to the major resistance at Rs 2,350.

(The views and recommendations featured in this column are based on the technical analysis of historical price action. There is a risk of loss in trading. The author may have positions and trading interest in the instruments featured in the column.)