Charts indicate exhaustion in market

Nifty formed an inside bar as it traded within previous day’s range. It recorded a lower volume on a weekly expiry day. It also closed below opening level, this phenomenon has continued for last 11 trading sessions. The trend is still on the upside, but momentum is further down

Positive Market Breadth:

• 1,737 advances
• 943 declines
• 138stocks in upper circuit
• India VIX is down to 13.34
• 188stocks hit a new 52-wk high
• RSI remains flat for tenth day
• MACD shows a decline in momentum

The stock market indices were resilient to decline. NSE Nifty gained by 51 points or 0.22 per cent. Nifty Realty is the top gainer, with 2.02 per cent being the top gainer. Nifty Private Bank index continues to rally by 1.16 per cent. The Midcap, Oil and Gas, Bank nifty, and Small cap indices gained by over half a per cent. Nifty Pharma is the top loser at 0.51 per cent. All other sector indices gained or lost by less than half a per cent. The India VIX is down by 2.68 per cent to 13.34. The market breadth is positive as 1,737 advances and 943 declines. About 188 stocks hit a new 52-week high and 138 stocks traded in the upper circuit. HDFC Bank, Chambal Fertilisers, RCF, and HAL were in the top trading counters in terms of value.

The Nifty has formed an inside bar as it traded within the previous day’s range. It recorded a lower volume on a weekly expiry day than the previous day. Nifty also closed below the opening level. For the last 11 trading sessions, this phenomenon has continued. As stated earlier, the trend is still on the upside, but the momentum is further down. The volumes were lower than the previous day. The index has formed another Dragonfly Doji. These indecisive candles are an indication of exhaustion. Still, there are no weak signals. The RSI has been flat for the last ten days. The MACD shows a decline in momentum. The index closed within the first hour’s range. On a weekly chart, the index has formed a Doji candle. The Reliance and private sector banks led the rally on Thursday. For now, as long as it trades above 23,386 points, be with a positive bias.

Though the index is moving higher, the momentum is coming down. It is better to continue the long positions as long as it trades above the prior day’s low. From next week onwards, the index may consolidate within the range till the budget. Follow the trend and continue the long positions with a trialling stop loss.

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