It’s not a time to be aggressive in mkts
In this four-day week, the Nifty has registered all-time highs for three days. In fact, five out of the last six days, it hit a new high, including extended trading on Saturday
image for illustrative purpose
Positive market breadth
- 986 declines
- 1610 advances
- India VIX is down by 4.77%
- 81 stocks hit a new 52-week high
- Weekly RSI didn’t make a new high
- 110 stocks traded in the upper circuit
The Nifty closed flat on a positive note on a long weekend. It gained by 19.50 points and settled at 22493.55. The Nifty Media and Metal indices were the top gainers, with 2.54 per cent and 1.38 per cent respectively. The Energy index is the top loser with 0.37 per cent. All other sectoral indices gained or lost moderately. The India VIX is down by 4.77 per cent to 13.61. The market breadth was improved as 1610 advanced and 986 declined. About 81 stocks hit a new 52-week high, and 110 stocks traded in the upper circuit. Five out of ten stocks of top trading counters belong to Tata Group on Thursday in terms of value. Tata Chemicals, Tata Power, Tata Steel, Tata Motors, and TCS are the top trading counters.
In this four-day week, the Nifty has registered all-time highs for three days. In fact, five out of the last six days, it hit a new high, including extended trading on Saturday. The last five-day price action confused the traders, though the index moved higher. It formed a bearish candle and was engulfed with high-voltage volatility on Wednesday, which engulfed the previous three days of price actions. On a Weekly expiry and long weekend, the Nifty has formed an indecisive candle and registered a new high close above 22500. As we discussed earlier, after a close above 22231, the target is open to 22780, which is a 50 per cent extension level of the prior swing. Currently is above the 38.2 per cent extension level.
Thursday’s indecisive candle formed with above-average volume. A lifetime high doji candle and a weekly hanging man candle on the weekly chart are signs of exhaustion. For the last four weeks, the volumes have been declining. The weekly RSI has not made a new high. Meanwhile, the Relative Strength is not showing any strength in the move. As the index is forming higher highs and higher lows, the trend is intact on the upside. Only a decisive close below the previous week’s low will give a reversal signal. The 10-week average is the strongest support placed at 21927. The Breakout level of 22127 is also a support. This week’s low of 22224-21927 is the support zone. Only below the trend will weaken and will provide confirmed reversal signals. It is not the time to be aggressive on both sides. We cannot take short positions, as no significant weakness is visible. We cannot go long aggressively, as breadth and volumes are not encouraging. Stay cautious.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
