MACD showing overstretched rally
Volumes were lower than previous day and below the average; RSI (73.33) reached an overbought condition
image for illustrative purpose
With the resumption of all-round buying interest, the benchmark and broader market indices gained. NSE Nifty is up by 76.80 points or 0.38 per cent and closed at 20,070 points. Only IT and Auto indices declined by 0.28 per cent and 0.46 per cent, respectively. The PSU Bank index is the top gainer with 4.23 per cent. The Nifty Media index is up by 1.53 per cent. The PSE and CPSE indices recovered by 1.20 per cent and 1.68 per cent, respectively. Most of the sector indices moved up by half a percentage points. The broader market breadth is positive. About 61 stocks hit a new 52-week high, and 89 stocks traded in the lower circuit. HDFC Bank, ICICI Bank, RVNL, and IRFC were the top trading counters today in terms of value.
The Nifty has registered the highest closing above the psychological resistance of 20,000 points. The Mid-cap and Small-cap indices made a smart recovery from the day’s low. The Nifty traded within the previous day’s first range and formed higher low candles on the hourly time frame. The volumes have been lower than the previous day and below the average. At the same time, the index closed above the upper Bollinger band for the fifth consecutive day. The Bollinger band expanded to the maximum, and the price had to go back into the bands sooner or later. As mentioned on Tuesday, the 19,914-19,890 zone of support is the key to any retracement. The index has formed an inside bar and indicates the same 19,914 and 20,110 range is key for the directional move. Either side breakout will give a good move. Currently, the index is in an expansion mode and may come to the mean level in the near future. The RSI (73.33) reached an overbought condition, and the MACD is also showing an overstretched condition. Currently, there is no divergence in any of the indicators. If the rally continues, the Nifty may test 20,438 points. To meet this target, the Nifty has to sustain above 19,914 points. As the Nifty weekly expiry is scheduled, stay cautious. Any unwinding of the positions may hurt.
