Nifty Likely to Experience Profit Booking Below 24,500 Amid Overbought Conditions

Indian Stock Market Ends on a Positive Note

The Indian stock market closed on a positive note on April 21, with the Nifty 50 finishing at 24,576.60, a gain of 212 points or 0.87%. The BSE Sensex also climbed, closing at 79,273.33, reflecting a gain of 753 points or 0.96%.

The trading session was characterized by a range-bound pattern, with the Nifty 50 opening at 24,374.55, reaching a high of 24,601.70, and touching a low of 24,354.90. This broad-based support was observed across various sectors, with FMCG and retail sectors leading the charge.

Sector-wise Performance

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On the other hand, SBI Life faced pressure, falling 3.5%, while BEL and Dr. Reddy's Laboratories slipped by 1.3% and 0.9%, respectively.

The positive earnings report from Nestle, which showed a 26% year-on-year rise in PAT, provided a boost to investor sentiment. Additionally, all sectoral indices closed trading in the green, with notable rallies in sectors like realty, private banks, and FMCG, indicating a broad-based recovery after recent volatility.

Market Analysts' Views

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Market analysts attribute the positive market movement to a mix of global and domestic cues. Gaurav Garg, Research Analyst Lemonn Markets Desk, notes that the short-term market texture is bullish, but due to temporary overbought conditions, some profit booking may occur at higher levels.

Shrikant Chouhan, Head Equity Research, Kotak Securities, observes that Nifty formed a bullish candlestick pattern with a higher high and a higher low, highlighting the continuation of the up move. He expects the market to maintain a positive bias and gradually head towards 24,700-24,800 levels.

Bajaj Broking notes that volatility is expected to remain high on account of geopolitical tensions and volatile crude oil prices. The analyst expects Nifty to maintain a positive bias and gradually head towards 24,700-24,800 levels.

Regarding Bank Nifty, Bajaj Broking expects the sectoral index to gradually head towards 57,700 and 58,500 levels as long as it remains above 55,850.

Technical Analysis

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, notes that the underlying trend of Nifty remains positive. He expects the market to pull towards 24,800-25,000 levels in the near term, with immediate support at 24,400.