Nifty forms bearish candle

The benchmark indices took a pause of a rally. The Nifty declined by 33.90 points or 0.14 per cent and closed at 24010.60. The Oil and Gas, Pharma, and Energy indices were the top gainers, with over one per cent gains. The PSU Bank, Smallcap, PSE and CPSE indices are up by 0.66 per cent to 0.88 per cent. The Private Bank index declined by 1.24 per cent. The Banknifty and FinNifty declined by 0.64 per cent to 0.89 per cent. The India VIX has declined by 2.47. The market breadth is positive as 1495 advances and 1180 declines. About 128 stocks hit a new 52-week high, and 92 stocks traded in the upper circuit. Polycab, CDSL, Reliance, and Bharti Airtel are the top trading counters in terms of value.

After hitting a new lifetime high, the Nifty took a breather on the weekend and formed another new lifetime. The last-hour selling pressure indicates profit booking. The Nifty has formed a bearish candle and looks like a Shooting Star. The index had declined by 188.2 points from the day’s high. The MACD gave a fresh, bearish signal on an hourly chart, and the RSI entered the neutral zone. This shows that the index is trying to come out of an overbought condition. The weekly RSI is in the strong bullish zone, and the daily RSI shows signs of cooling off momentum. But, the index has not given any bearish signal.

Friday’s move indicates only exhaustion and profit booking. For the second successive day, the Reliance contributed 72 points to the Nifty, otherwise, the index could have closed much lower. As stated earlier, the index must reverse to the mean. The 8EMA support is at 23758, which is also a channel’s support line and is the nearest strong support for now. Below this, the 23611 will act as strong support. On the upside, the Nifty must close above 24174 to continue the upward momentum. Now, protecting the profits must be a top priority.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)