SGX Nifty Rallies 80 Pts; 2% Away from Lifetime High!

Aayush Khanna/Investing.com - Investing.com

The blistering rally in the Indian markets continued last week as well, as the benchmark Nifty 50 index surged 0.97% to 18,499.35, giving the highest closing of 2023. It seems like the bull run in the market hasn’t ended yet and a break above the lifetime high will further paint a green picture for Indian equities.

Currently, the index is just 2.09% away from reaching its all-time high and probably this week we might see a new high on the index. The SGX Nifty rallied 84.5 points to 18,632.5 by Friday’s closing which indicates a gap up opening on Monday. On the daily chart as well, there has been a good continuation up move seen on Friday as the index crossed its previous swing high of 18,458.9, marked on 15 May 2023. As can be seen from the chart below, this move has further extended the higher high and higher low formation in the index.

Image Description: Daily chart of SGX Nifty

Image Source: Investing.com

Clearly, the technical setup is bullish and options chain data is conforming to the same. Very interestingly, the highest open interest (OI) on the call side is present at 19,000 CE for the current 1 June 2023 weekly expiry. That is not just higher than the all-time high but also noticeably higher than the Nifty June 2023 futures price of 18,570.2. Although the market might not rally to 19,000 this week, the probability of breaking the ATH which is just 279 points away seems decent.

Another reason to be bullish is the technical setup of Reliance (NS: RELI ), the highest-weighted Nifty 50 constituent. The counter has delivered a breakout of Friday and seems ready to scale to a high of INR 2,600, which is roughly INR 94 distance from the CMP of INR 2,506.5. Considering the stock’s weightage of 10.65% in Nifty 50, a little help from other heavyweights can easily take the index to a new high.

Now what are the risks? There is a very major risk looming around that could play a spoiler to the bulls’ party and that is the uncertainty revolving around the US debt ceiling. If the US manages to extend its debt ceiling to meet its expenses, then that would probably lead to a sharp rally in the US markets, while failing to do so might trigger a selling spree. In either case, the ripple effects will be seen on our markets and hence this event could be a make-or-break one for the Nifty 50 to achieve a new ATH.