Charts indicate no weakness on any time frame

The equity market bounced after just one day of negative closing. Today also it gained almost a percentage gain. The NSE Nifty closed at a record high of 17,234.15 with a gain of 157.90 points. Barring auto and PSU banks, all the sectoral indices took part in the rally. The Nifty IT and FMCG indices are up by 1.67 percent each. The realty index advanced by 1.25 per cent, Bank Nifty is by 0.70 percent. The Nifty Midcap-100 and Smallcap-100 indices are up by one per cent each. The overall market breadth is positive as 1,287 advances and 630 declines. About 113 stocks hit a fresh 52 weeks high and 158 stocks traded in the upper circuit.

The benchmark index scaled new highs almost in all trading sessions during the last five trading sessions. With a small profit booking on Wednesday, the index closed in negative territory. During the last five trading sessions, it gained by 597.25 points or 3.59 per cent with the help of two massive days of the 200 points rally. It registered very strong gains in four out of five days. It formed another higher high and higher low bar on Thursday. This shows a strong uptrend. The Nifty extended and almost met our earlier target of 17,265 points. The weakness is limited to just for one day and registered a new high close. The leading indicator, RSI, has reached above 80 zone after January 2021, indicating that the index is extremely overbought. At the same time, the index is closing above the Bollinger upper band for the fourth consecutive. It has come into the bands in the next two to three sessions. The index is now 3.88 per cent above the 20DMA, which is also showing an extension of an up move. After this whopping move, as a rule, it may enter into a consolidation. It does not mean that the market will correct significantly. There is no weakness on any time frame. Only in case of closing below the prior bar low, book the profits and wait for a fresh entry levels.

(The author is financial journalist, technical analyst, family fund manager)