Limited upside move possible
In any case, it closes below Monday’s low of 22,550pts, which will give a weaker signal; Stay with cautiously optimistic; Put-Call Ratio for weekly expiry is at 1.42, which is the highest level
image for illustrative purpose
Led by the auto and energy sectors, the equity benchmark indices closed at a new lifetime high. NSE Nifty rallied by 152.6 points or 0.68 per cent and closed at 22,666.30 points. The Nifty Auto is the top gainer with 2.16 per cent, followed by the Energy index by 1.27 per cent. Infra and Metal indices also gained by over 1.1 per cent. The PSU Bank, Media, and IT indices were down by 0.89 per cent to 0.52 per cent. All other indices advanced by 0.10 to 0.98 per cent. The India VIX is down by 2.40 per cent to 11.61. The market breadth is slightly negative as 1,343 declines and 1,245 advances. About 172 stocks hit a new 52-week high, and 160 stocks traded in the lower circuit. Exide Industries, Adani Ports, HDFC Bank, and Voltas were the top trading counters Monday in terms of value.
The Nifty rallied further and closed above the Thursday high. After opening above the prior days, it continued to sustain in bullish territory. The Bollinger bands expanded further, indicating a further upside move is possible. The rising trendline resistance is placed in the 22,780-22,800 zone, which may act as strong resistance. Now, the index is 2.70 per cent above the 50DMA. The MACD shows a slight increase in the momentum. The RSI moved above the 66 zone, which is also a positive signal. But the concerns still remain. The important options data shows that the Put-Call Ratio (PCR) for weekly expiry is at 1.42, which is the highest level, showing that the index is near a swing high and the upside is limited. Interestingly, the monthly PCR is at 1.25. As the truncated four-day expiry, more short built-up was seen. The volumes have not yet been picked up. The new high was formed with volume, giving an element of doubt on the sustenance of the rally. The negative breadth is also not a good sign. The heavyweight sector index, Bank Nifty, also lost its momentum. We need to watch the index behaviour near the 22,700-22,800 zone. We may see profit in this zone. In any case, it closes below Monday’s low of 22,550, which will give a weaker signal. Stay with cautiously optimistic.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
