High volatility more likely
Be with a neutral bias as Nifty forms a bearish Shooting Star; Though the index registered the highest closing on Wednesday, the price pattern is not confident enough to be aggressively bullish
image for illustrative purpose
The equities traded subdued for another day. On a muted volume, a majority of sectors were closed positive. The Nifty gained by 58.10 points or 0.25 per cent and closed at 23322.95. The CPSE and PSE indices were the top gainers with 1.61 per cent and 1.39 per cent. The Smallcap, PSU Bank, and Midcap indices gained by over one per cent.
The FMCG, Auto, and Reality indices closed marginally lower. All other sector indices gained by less than a per cent. The India VIX further down by 2.56 per cent to 14.38. The market breadth is positive as 1834 advances and 825 declines. About 168 stocks hit a new 52-week high, and 176 stocks traded in the upper circuit. HDFC Bank, ICICI Bank, Tata Motors, and Idea were the top trading counters on Wednesday in terms of value.
The Nifty hit another lifetime high at 23441.95 on a rangebound trade. Though the index is moving higher, its momentum is still lagging. It moved above the last two-day range but failed to sustain a higher level. It closed at the day’s low. The Nifty formed its third consecutive bearish shooting star candle. The volume was below average and subdued for the third day. The fact is that the index fails to sustain at the higher level. For a bullish strength, the Nifty must move out of the last three days’ range.
Only a close above 23400 will continue to rally further high. The 23300-400 zone has been acting as strong resistance for the last four days. Even though the index registered the highest closing on Wednesday, the price pattern is not confident enough to be aggressively bullish. As stated earlier, be with a neutral bias. The Banknifty also formed the third consecutive shooting star candle. The RSI is flat for the fourth day, hovering around 60. The hourly MACD shows an increasing bearish momentum. For now, the short-term support is now at 23052. Most probably, the index may test this level before arriving at trend bias. On an expiry day, we may see low volatility this time.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
