ADX indicates poor trend strength; lowest in 2 yrs

THE domestic market ended higher for the second consecutive day and reached close to the previous high. With the last hour profit booking, it finally closed with 32 points gain at 15,856.05. The Bank Nifty was up by 1.03 per cent, and the Realty index was up by 1.29 per cent. FMCG, FinNifty was up by 0.81 per cent and 0.85 per cent. Media, Infra and Energy indices were down by half a per cent. India VIX went further down by 1.03 per cent to 11.76. The overall market breadth was negative as 1,089 declines and 833 advances were recorded. About 180 stocks hit a new 52-week high and 125 stocks traded in the upper circuit band. The new listing Zomato gave a 65 per cent return on day one.

The market once again inched up towards the upper band of consolidation. It closed above the previous day high and formed an indecisive candle - Doji. This is again creating doubts about breaking out of the consolidation zone. During the last four trading sessions, the Nifty formed two Doji candles. It filled Monday's gap. On a weekly chart, it formed another Hanging man above the 10-week average. The candle formed a lower low and lower low, within the confluence of lifetime high. We cannot see any major trend as long as the 15,635-15,915 range was broken out with a sharp move. The consolidation phase is not giving any clues or opportunities to trade. The negative divergence was still present in the weekly and daily time frames. The RSI faced resistance at a sloping trend line on the weekly chart. Though the price was near the previous high, the RSI was far away from the high. The ADX (9.44) shows poor trend strength and lowest in the last two years. Let us wait for Monday for clear signals.

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