Nifty forms strong bullish bar
NSE benchmark index missed a new high by just 10 pts; The volumes were lower than the last 10 days; Avoid highly leveraged positions
Now, Friday’s high and low, 24174-23985, will act as resistance and support. If the index trades above 24174, it may test the 24245-350. But, in any case, if the index declines below 23985, the next level of support is at 23750
The IT sector stocks were in limelight on Monday and led the market. NSE Nifty gained by 24,131.35 points or 0.55 per cent and closed at 24,141.95 points. The Nifty IT index is the top gainer with 1.97 per cent. The Smallcap and Midicap indices are up by 1.51 per cent and 1.00 per cent, respectively. The FinNifty, FMCG, and Private bank indices were up by half a per cent. The PSU Bank index is the top loser with 0.76 per cent, followed by Energy index with 0.53 per cent. The India VIX up by 0.20 per cent to 13.83. The market breadth is positive as 1,960 advances and 796 declines. About 209 stocks hit a new 52-week high, and 186 stocks traded in the upper circuit. Maxdock, GRSE, CDSL, and HDFC Bank were the top trading counters on Monday, in terms of value.
The Nifty formed a strong bullish bar with the help of IT stocks. It missed a new high by just ten points. The volumes were lower than the last ten days. The Nifty opened with a flat to negative bias, and gradually moved higher. As stated earlier, there are no weaker signals. But the concern is the low volume rally. On a lower time frame, there is a hidden divergence, and momentum is clearly lagging. The afternoon session was very dull as it traded in a very tight range. The Nifty has formed an inside bar and the engulfing candle.
Now, Friday’s high and low, 24174-23985, will act as resistance and support. If the index trades above 24174, it may test the 24245-350. But in any case, if the index declines below 23985, the next level of support is at 23750. The 8EMA support is at 23843. If the index trades within the Friday’s range again, expect a reasonable retracement. The distance between the price and the 20DMA is increasing, and Bollinger bands expansion is at its maximum levels. So expect a mean reversion. Once the Budget date is announced, the market may experience nervousness and be subdued for some time. For now, be with the trend as long as the previous day’s low is protected. Avoid highly leveraged positions.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)