Close above the 18,115 will keep Nifty positive

The equity markets bounced from the lower levels with a neutral monetary policy. The Benchmark index, Nifty was up by 44.8 points or 0.82 per cent and closed at 17784.35. Barring Nifty IT, all the sectoral indices ended with decent gains. The FMCG and Metal indices were the top gainers with over 2 per cent rise. Infra, Energy and PSE indices were up by over per cent. All the other sector indices advanced less than a per cent. The India VIX is declined by 6.9 per cent. Overall, market breadth was positive as 1,453 advances and 645 declines were recorded. About 67 stocks hit a new 52-week high, and 127 stocks traded in the upper circuit. Ruchi Soya, HDFC Bank and HDFC were the top trading counters.

RBI's policy has given priority to inflation overgrowth and maintained the status quo on policy rates. The equity market bounced sharply from the lower levels with this surprising decision. The Nifty has recovered 242 points to the day's high after the RBI policy. As it is a neutral policy, the market bounce may absorb the initial euphoria. The Nifty has formed an outside bar. On a weekly chart, it formed a long-legged doji candle. If we assume that this high is a swing high, three consecutive highs were the bearish formation. The first one in October is a dark cloud cover, and the second one is a very big bearish bar closed below the prior week's low. The current week's long-legged doji candle indicates that the upswing is at the mature stage unless it closes above the 18,115 level, where the sloping trendline is placed. The Nifty 50DMA (17,143) and the 200DMA (17,130) have been moving parallel for the last four days. These two important averages were flattened. The outside bar's high of 17,843 and the low of 17,600 will act as a resistance and support for the next week's opening. The MACD line is ready to move above the signal line on the weekly chart. RSI is near the strong bullish zone. In any case, the Nifty closes in the negative zone next week and will confirm the bearish implications of the long-legged doji. But, only a close above the 18,115 will be positive and can continue the ongoing upswing.

(The author is financial journalist, Technical Analyst, Family Fund Manager)