Raja Venkatraman recommends three stocks for 3 November

PHOENIXLTD (Cmp 2016.60) BHARTIHEXA (Cmp 1680.70) Indian equities began November on a strong footing, extending the previous session’s gains despite mixed global cues and weakness in overseas technology stocks. The Nifty opened with a sharp gap-up and maintained its upward momentum throughout the day, supported by strong buying in heavyweights, particularly Reliance Industries following its quarterly earnings.

Strength in energy, auto, PSU banking and select FMCG stocks helped benchmark indices register solid gains, while IT stocks remained relatively subdued amid lingering concerns from global tech markets. Market breadth improved as investors welcomed easing crude oil prices and positive domestic sentiment, though volatility remained elevated with India VIX inching higher. The Nifty decisively moved above key resistance zones, signalling renewed bullish momentum and improving market confidence.

Option data suggests aggressive put writing at lower levels, indicating strong support, while call writers shifted higher, reflecting expectations of further upside. Going ahead, sustaining above these breakout levels will be crucial for the bulls, with investors closely tracking earnings announcements, institutional flows and global developments for fresh directional cues. Overall the outlook remained very encouraging as the trends are showing promise that we are observing as the markets are once again indicating prospects of heading higher.

Technically, the index formed a large bullish candle with a strong close near the day's high, indicating aggressive buying interest throughout the session. The breakout above the highlighted resistance region suggests that sellers who had defended this zone earlier have been overwhelmed by fresh demand. Such a move often leads to short covering along with fresh long additions, providing further momentum to the uptrend.

The Relative Strength Index (RSI) has also strengthened significantly and is now trading above the 60 mark. This is an important development, as the indicator has moved out of the neutral range and is reflecting improving bullish momentum. Rising RSI coupled with a price breakout generally enhances the reliability of the bullish signal. From a broader perspective, the sharp recovery from October lows and the successful retest of higher levels indicate that market participants are becoming increasingly optimistic.

The immediate support zone now shifts to the breakout area of 23,250-23,300, while resistance is seen around 23,600-23,800 levels. Holding above the newly established support band will be critical for sustaining the present momentum. Overall, the market structure has improved considerably, with price action and momentum indicators aligning in favor of the bulls. Traders are likely to adopt a positive bias going forward, while any corrective dips towards support zones may attract fresh buying interest.

The breakout has strengthened the probability of an extension of the ongoing recovery rally in the coming sessions. Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223. Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.