Trade Setup for October 10: Nifty bulls aim to break above the 25,250 barrier after TCS results

While writing the setup for Thursday's trade, we told you about how Tuesday's and Wednesday's sessions were exact replicas on the Nifty 50 charts. Intraday recoveries getting sold into and dips getting bought. Thursday was the reverse of that trend.

Similar to the last two sessions, the Nifty gave both the bulls and the bears equal opportunity. But unlike the last two sessions, the index ended near the day's high instead of ending at the day's low.

It may only have been a small margin, but the Nifty did manage to make a higher high and a higher low on the charts in today's session. All sectoral indices ended higher on Thursday, led by Metals, IT and Pharma, with the IT index now gaining 5% so far in the four trading sessions of the week so far.

IT stocks will continue to remain in focus after TCS results. Two possibilities emerge after the results that surpassed expectations on most fronts - One being that the stock sees some profit booking considering it has gained in three out of the last four trading sessions. Second probability being that considering that the stock is already beaten down and is a major underperformer this year, the recovery from the 52-week lows may just continue.

In response to TCS' results, the US-listed shares or ADRs of both Infosys and Wipro are trading with gains of up to 1% each.

The surge in IT stocks has taken the spotlight away from the Nifty Bank, which has remained away from the limelight for a better part of this week. Although the index made a lower high on the charts on Thursday, it made a higher low, and also managed to sustain above the 56,000 mark, which remains level on the downside for the index. On the upside, the 56,280 - 56,300 zone continues to remain a barrier. The Nifty Bank needs to close above 55,589 to also report its fifth weekly gain in the last six weeks.

"The shorter-term moving averages continue to display strength, with a bullish crossover of the 9-EMA and 20-EMA over the 50-EMA, confirming the continuation of the near-term uptrend. The RSI has inched up to 63, reflecting sustained momentum. A close above 56,300 could open the door for a further move toward 56,550–56,700," Om Mehra of SAMCO Securities said.

"The support remains in the 55,900–55,800 zone. The index remains resilient, and as long as 55,800 holds this level, the short-term tone is likely to stay bullish, with a preference to add on declines," he added.

The Nifty has now gained in five out of the last six trading sessions and is set for a weekly advance as well. The index needs to close above the 24,894 mark to register it fifth weekly advance in the last six weeks. The first important level to watch on the upside for the Nifty is Tuesday's swing high of 25,220. The index continues to find support between the 25,000 - 25,050 levels, and that continues to remain the key level on any potential dip.

"The short-term trend of Nifty continues to be positive. A decisive move above 25,200 levels could pull Nifty towards another resistance of 25,450 levels in the next few sessions. Immediate support is placed at 25000 levels," said Nagaraj Shetti of HDFC Securities.

Shrikant Chouhan of Kotak Securities believes that the 25,200 - 25,250 zone will continue to be an immediate hurdle for the bulls. A breakout above that zone could take the index back to its recent highs of 25,450 or maybe even 25,500, he added.