Optimistic Outlook With A Caution

Nifty closed above the 26,000 level and registered another highest closing in its lifetime. The index closed out of the Bollinger bands for the fourth consecutive day, and the bands expanded sharply. The broader market showed weakness, Small and Midcap indices closed negatively

NSE Nifty closed at a record high with late-hour buying. It closed at 26,009.85 points with a 63.75-point gain or 0.25 per cent. The CPSE and Energy indices, gained by 0.82 per cent, are the top gainers. The PSE index is up by 0.54 per cent. The PSU Bank index is down by 0.87 per cent is the top loser. The Nifty IT declined by 0.67 per cent. The India VIX is down by 4.85 per cent to 12.74. The market breadth is negative as 1,594 declines and 1,197 advances. About 135 stocks hit a new 52-week high, and 101 stocks traded in the upper circuit. Easemytrip, HDFC Bank, Powergrid, and IEX were the top trading counters on Wednesday in terms of value.

NSE Nifty registered another of the highest closings in its life. For the first time, it closed above the 26,000 level. After an initial weakness, Axis Bank and HDFC Bank led the recovery, which saw it recover by 157 points in the last two hours. As it closed above the prior day’s high, it negated the previous session’s Shooting Star bearish implications. It formed an outside bar, but the volumes were lower than the previous session and below the average. The RSI is still flat at 75.35. The index closed out of the Bollinger bands for the fourth consecutive day, and the bands expanded sharply. The broader market showed weakness as the breadth was negative and Small and Midcap indices closed negatively. Even the Nifty-500 is also negative. Even Wednesday’s small decline also witnessed a buying interest and exhibited strong trend strength. As mentioned on Tuesday, only a close below the previous session’s low will provide signs of weakness. The nearest 8EMA support is now at 25,708 level. The 20DMA is at 25,353 level, which is 2.57 per cent below. The recent swing high distance is also 2.6 per cent. So, expect the unexpected move on the downside. Protecting capital is always a priority in the market. Stay cautiously optimistic.

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