Markets bewildered amid Gujarat results, Nifty recovers above channel pattern

Indian stock markets went violently volatile on the first day of the week, ahead of the Gujarat election results, where Congress gave a tough fight to the BJP in the morning counting session leading to a huge gap-down opening in the most major indices. At 11.30 hours win and leads together stood at 105 for BJP and 74 for INC+ in Gujarat while 41 and 22 in Himachal respectively.

Indian benchmark indices shed maximum of 259 and 868 points for Nifty and Sensex, respectively from the previous closing. Now Nifty and Sensex have recovered with 80 and 250 points surge at 11.38 hours.

Technically, the benchmark index Nifty had given a marginal channel pattern breakout on December 15 with rising volumes and 14-period RSI at 56 suggested a good momentum ahead. On December 18, Nifty witnessed a pullback with prices correcting in the channel yet again. Nifty has bounced back above the upside channel trendline level at 10310 and surged so much that it broke the previous major resistance at 10410 levels.

In case Nifty sustains 10410, it has a long way to go. Above 10410 on a closing basis, we hold 10460-10490 as the immediate resistances. On the downside, 10310-10290 followed by 10210-10160 are the near term supports.