Expect more intraday sharp moves on either side in mkt

The equities recovered from the day's low, as the defensive sectors like IT, auto, and pharma stocks were in the limelight. The Nifty gained by 76.20 points or 0.34 per cent and closed at 22198.35. The Nifty IT, auto, and pharma indices are up by 0.57 per cent to 0.72 per cent. The Realty index is the top gainer with 1.07 per cent. The PSU Bank index declined by 0.56 per cent, is the top loser. All other sectoral indices gained or lost by less than half a per cent. The India VIX is up by 0.82 per cent to 15.73. The Market breadth is negative as 1561 declines and 991 advances. About 145 stocks hit a new 52-week high, and 95 stocks traded in the upper circuit. IREDA, HDFC Bank, Railtel, and JioFin were the top trading counters on Tuesday in terms of value.

The Nifty ended its two-day decline and closed at the prior day's high. It formed an open low candle, which is a sign of bullish strength. Two days before the derivatives expiry, the volumes and the open interest picked up. The index also formed a bullish engulfing candle. The Nifty has registered a high close with a bullish candle, so it looks like the weakness is erased. However, the six days of price action were wavering and volatile. Even before the current tight base, the index moved in the same manner.

The RSI still have a negative divergence. Though it closed above 60, the sideways move shows strength needs to be improved. The Relative Strength line is also below the 21 EMA. If the index is able to close above the prior high, and the RSI and RS lines break above the prior highs, the index will improve its bullish strength and begin its outperformance. A close above 22300 will erase all doubts about the continuation of the trend. But, a close below the rising channel's support, 22050 and the 20DMA of 21914 will be negative and the market status will to uptrend under pressure from a strong up trend. The negative market breadth on a positive day shows weaker broader market strength. As the expiry is in two days, expect more intraday sharp moves on either side. 21900-22300 zone is crucial for a directional bias.

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