MACD About To Give A Bullish Signal

The IT and Consumer stocks led the market as NSE Nifty gained by 68.05 points or 0.29 per cent and closed at 23,267 points. Nifty Consumer Durable index is the top gainer with 1.97 per cent, while Midcap, and IT indices advanced by 1.86 per cent, and 1.79 per cent, respectively. The Media, Pharma, Healthcare, Smallcap, and Auto indices were up by over 1 per cent. On the flipside, the Oil and Gas index is down 0.51 per cent and is the top loser. The Bank Nifty, and FinNifty are down by 0.28 per cent and 0.11 per cent.

The India VIX is down by 0.46 per cent to 16.69. The market breadth is positive as 1,575 advances and 1,236 declines. About 81 stocks hit a new 52-week low, and 79 stocks traded in the lower circuit. HDFC Bank, Zensar Tech, Axis Bank, Kalyan Jewellers, and Coforge were the top trading counters, in terms of value. The IT stocks led the market recovery for the second day. The Nifty has formed a higher high and higher low candle and closed above the prior day’s high. But the volumes were less than the previous day. Most of the scrips witnessed a short covering rally. Post-earnings, HDFC Bank failed to continue the momentum.

It formed an open high candle, which is negative. The index faced resistance at 8EMA for the consecutive day. All the moving averages are in the downtrend. The 20DMA is at 23,487 points, which is the strong resistance for now. The daily MACD is about to give a bullish signal. The RSI is just above the 40 and entered into the neutral zone. The price action for the last two days is limited to Monday’s range. For a directional move, it must close out of the 22,976-23,426 range. Currently, 50 per cent of Monday’s move has been retraced. Just before the Budget, the index may consolidate in the range, mostly below the 20DMA.

If the index fails to move above 23,426 and closes below the prior day’s low, it will be negative and resume the downtrend. On the downside, the immediate supports are at 23,147 and 22,976. The strongest support is at 22,836, which has the highest probability of testing. Expect a bounce from this level. The General Budget must act as a booster for the market; otherwise, expect a deeper correction. The pattern target is 22,246. The FIIs selling already reached over Rs60,000 crore, the highest after October 2024. This intense selling from the institutions is not good for the market. As of date, the earnings are not supporting the market to bounce considerably. In these conditions, stay away from the fresh buying in the indices. The bounces will be short-lived.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)