Nifty Update for May 25 - Inder Bhatia

Last week the Sensex gained 14.1 percent and Nifty gained 15.4 percent respectively, closing the eleventh consecutive weekly gain. On Monday, the stock markets hit the upper circuit twice and made history demonstrating a clear mandate for the UPA-led government.

Daily: On the charts, one can observe that before any new breakout or breakdown Nifty had spent at least five months trading in a 1000-point range. After this, Nifty has seen a breakdown. Next, Nifty has traded in a 700-point range for almost three months, before a further breakdown was noticed. Following this, we see the Nifty had spent more than five months in a 700-point range - 3200-2500 zone - and seen then saw a breakout from 3200 to 4600.

Nifty has moved to this level in just more than one month and a big gap has been left behind. At least a gap needs to be filled or partially filled. Nifty should spend time around 3800-4500. If Nifty closes above 4650 with volume, the new range of 5300-5500 zone will open, while closing below 3790 would be a sign of weakness.

Hourly: The Indian market opened on a weak note and saw smart gains in the afternoon session and closed in the green zone. For the coming session if Nifty trades above 4257 then it can test 4307-4335. On the lower side trading below 4197 it could test 4163-4150.