Even as Nifty closes at record high, upside move is limited

The benchmark indices bounced after one-week consolidation phase. The Nifty and the Banknifty closed at a record high. The Nifty closed at 15,314.70, a gain of 1.00 per cent. The BSE Sensex climbed above 52,000 levels. The broader indices also closed in green. The Nifty Midcap-100 and Smallcap-100 closed with 0.42 per cent and 1.31 per cent gain. The IT, Pharma and the Metal indices were the laggards in today's market. The India VIX also cooled off by 2.57 per cent. It changed the direction towards the downsides indicating less volatility in the coming day. The Nifty breadth was 1:1, and the overall market breadth was negative as 1,074 declines and 845 advances were recorded. It is interesting to note the continuation of the rally as today's breadth was not supportive of the rally.

The market opened with 107 points gap up and sustained till the end. After two hours of trading, it traded in a tight range. At the end, it closed at the day's high. The gap up openings after a tight consolidation are the signs of bull strength. As the tight base patterns generally result in a sharp move and this time also repeated the pattern implications. The Banking and Financial services sector stocks led the rally.

The Banknifty closed at a new record high with a whopping 1,200 points gain. Interestingly, the Banknifty continuously rising till the end, while the Nifty rallied first and lasted 15 minutes. The remaining time it oscillated within the tight range. Today, on a daily basis, and on an intraday basis, the Nifty experienced range breakout and resulted in sharper moves. The gap up opening has an implication of further upside. As the tight range was with 279 base, today the breakout has achieved over 50 per cent of measured gap target. It has the potential to move another one per cent. As long as, the previous day low is protected, continue to be with the bullish bias.

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