Hold long positions with stop loss at 18,128

The domestic equity market closed higher for the fourth successive day. The frontline index, Nifty, gained another 156.60 points or 0.87 per cent and settled at 18212.35. The Pharma and IT indices closed flat to negative. Nifty Energy is the top gainer today with 2.14 per cent. Realty, Infra, and Commodities indices advanced by over 1.5 per cent. Before weekly expiry, the India VIX declined by 3.24 per cent. The Market breadth is positive as 1105 advances and 942 declines. About 190 stocks hit a new 52 week high and 149 stocks traded in the upper circuit.

The Nifty has touched out target of 18211 on a closing basis. It opened with a 115 point huge gap-up and closed at the prior swing high. As long as this gap is protected, the market is poised for a new lifetime high. The benchmark index also closed above the 80 per cent retracement level. The Nifty closed above the 18000 level for the second successive day, but the volume recorded further lowest level. Only in case of a gap down and closing negative will be a bearish signal. The negative divergence is still present in the leading indicators. After opening over 115 points positive gap, the index traded within 100 points range, it formed all indecisive candles during the day.

The current uptrend structure is a very strong bullish opening and indecisive small body candle during the day. It is still moving in an upward channel and moving in the middle of the channel for the last two days. Though the market is closing higher, the momentum is still lagging. On a daily chart, some of the indicators reached to an overbought condition. But, there is no significant weakness in the market it is better to continue prior day low 18128 as key support and stop loss. In any case, The Nifty closes below 18080; this weekend, we may see some decent correction in the market. Hold the long positions 18128 as strict stop loss and aim for the new high with a trialling stop loss.

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