It’s retracement in downtrend
The counter-trend target is at 19,225, which is 38.2%; If the buying interest is generated, the next target is 19,343 points
image for illustrative purpose
Mkt Pulse
♦ Nifty opened at 150 DMA
♦ Moved higher and closed above the previous day’s high
♦ It is the first sign of reversal.
♦ 48 stocks hit a new 52-week high
♦ 145 stocks traded in the upper circuit
The broader market gets support at the lower levels. NSE Nifty bounced by 190 points or 1.01 per cent, and closed at 19,047.25. A majority of sectoral indices gained by over one per cent. The PSU Bank index is the top gainer with 4.11 per cent. The Small-cap and CPSE indices are up by 2.01 per cent and 2.09 per cent. All other indices are up by 0.61 per cent to two per cent. The India VIX is down by 7.03 per cent. Broader market breadth is positive. About 48 stocks hit a new 52-week high, and 145 stocks traded in the upper circuit. HDFC Bank, Reliance, and Axis Bank were the top trading counters today in terms of value.
The equities rebounded after a six-day crash. The Nifty opened at 150 DMA, moved higher and closed above the previous day’s high. It is the first sign of reversal. It also filled the previous day’s gap. Week on week basis, the index has registered the worst loss in recent months. It was finally able to close above the 30-week average. With today’s over one per cent gain, the hourly RSI entered into a neutral zone. After sustaining in the extreme oversold zone for two days, it has given a bullish signal.
It also back into the Bollinger Bands, as expected. The daily RSI is still in an oversold condition. The volumes were lower than the previous day and the previous week. As we expected yesterday, the Nifty entered into a counter-trend consolidation. It tested the 23.6 per cent retracement level today. The counter-trend target is at 19225, which is 38.2 per cent. If the buying interest is generated, the next target is 19,343 points. We can’t project more than this now. As long as today’s low of 18,926 level is protected, stay positive for the next 2-3 days. Overall, the market has entered a downtrend. In a downtrend, retracements are common. Watch the Nifty behaviour around the 19,225-345 zone. The most powerful retracement can test the 61.8 per cent retracement at maximum, which is at 19,463 points. For the next five months, the index will form lower highs and lower lows. Stay neutral to positive for the short term and neutral to negative for the
medium term.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
