MACD indicator gives fresh buy signal
Nifty formed an outside bar or a bullish engulfing pattern and with index at a new high, we can consider that 13-mth-long counter-trend consolidation is ended, from here, expect mkt to move higher with smaller consolidations
image for illustrative purpose
The Indian stock market has entered a new bull phase. It erased all the losses made from October 2021. The Benchmark indices, NSE Nifty and the BSE Sensex closed at new highs. The Nifty gained by 50 points or 0.27 per cent and closed at 18,562.75, which is the new highest close in its history. The oil and gas stocks are the top gainers in Monday's market.
The Energy index rose by 1.33 per cent on low Crude oil prices. The other sectoral indices gained by less than 0.50 per cent. The Nifty Metal index is down by 1.14 per cent. Fin Nifty, IT, and Media indices also declined by less than 0.5 per cent. The market breadth is positive as 1,156 advances and 760 declines. The advance-decline ratio is 1.46. About 91 stocks hit a new 52-week high, and 101 stocks traded in the upper circuit. Reliance, HDFC Bank, and IRFC were the top trading counters on Monday.
The Nifty hit a new lifetime and closed a new high. It opened on a negative note and bounced to a new high. It formed an outside bar or a bullish engulfing pattern. With the index at a new high, we can consider that the 13-month-long counter-trend consolidation is ended. From here, expect the market to move higher with smaller consolidations.
As long as it trades above 18,258, it is better to avoid the bearish view on the market. Only below the recent base low of 18,114, we may get the reversal signs for short to medium term. With the benchmark index at a new high, all moving averages are in an uptrend. Currently, the index is trading 4.7 per cent above the 50DMA and 1.67 per cent above the 20DMA.
This shows that the probability of mean reversion is minimal. If the Nifty is able to close above 18,545 for two days, we can expect 18,780, 19,034, and 19,180 levels in the short term. The RSI closed at the near prior high. As stated yesterday, a close above 69-70 will increase the possibilities of the above targets sooner. The MACD has given a fresh buy signal, moving above the signal line. We do not have any divergences. There is no weakness in any time frame. Ride the trend as long as it is intact.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
