Lack of momentum on longer-term chart on Nifty

THE Nifty took a breather after four days of negative bias. It gained by 42.2 points and closed at 15722.20. The Metal index is the top loser with 1.49 per cent. The Pharma, Media, and the Realty indices were up by half a per cent. Smallcap-100 index outperformed with a 1.07 per cent gain. All the other sectoral indices closed on a flat note. The PSU Bank index gained the most, with Nifty losing 138.15 points or 0.87 per cent during the last week. It closed below the opening levels every day, The VIX declined by 9.57 per cent during the week and closed at 12.13, the lowest in the last 18 months. The market breadth was positive as 1,134 advances and 775 declines, and 175 stocks traded in the upper circuit on Friday.

The Nifty formed a hammer candle as the buying support from the lower levels. On a Weekly chart, it formed a dark cloud cover kind of candle, as it retraced about 50 per cent of the previous week move. As the index is still trading in the range, no decisive signals are present on the chart. Though it formed a bearish weekly candle, it requires confirmation for a short move. As the Nifty failed to close below 15,670 level, the bulls are still in control on the market. The month long-range shrunk to just 200 points. The consolidation may continue between 15,400 and 15,900 zone. Only out of this zone, the market will witness an impulse move. Apart from the bullish hammer, The RSI has bounced back from a support. On a 75-minute chart, the MACD is about to give a buy signal. There is a lack of momentum on a longer-term chart. A huge option is selling on both sides, calls and puts. The derivative data shows that the short covering in the index is closed in the positive territory. There are several technical warning signals on the chart. This is when strict trailing of stop-loss levels will help in optimum protection of profits at current and higher levels.

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