Market gains with bank stocks bounce

The decline in Covid cases and strong global market combined with banking stocks bounce resulted in massive rally in the market. The Nifty closed at 14,923.15 with 245.35 points or 1.67 per cent.

The Banknifty top gainer with a whopping 1,289.7 point or 4.01 per cent gain. FinNifty too up by 3.2 per cent. Metal index up by 2.29 per cent. Barring pharma and media indices, all the sectoral indices up by over 0.50 per cent.

India VIX further declined by 3.26 per cent. Market breadth is positive as 1,333 advances and 627 declines. 125 stocks hit a new 52 week high and 199 stocks hit the upper circuit today.

The Nifty rallied most after April 28, it closes above 14,880 resistance after May 10. It reclaimed the 50DMA decisively. On a weekly chart, it formed a higher swing low. It also closed above the anchored VWAP support and resistance levels.

On the hourly chart, all the bars closed above the prior bar high, is the most bullish character of the market. It is also broken out of a sloping channel for the second time in this month. On a daily chart, the Nifty formed an inverted head and shoulder king of a pattern with complex price action.

The success of this breakout depends on the follow-through days. Sustaining above the 14,880 zone for at least the next two days is very important for the market. Above 14,880, the resistance zone is placed at 14,967- 15,044. The 61.8 retracement level is at 14,943. The 14-period daily RSI move above the 55 zone and near resistance.

MACD histogram shows the bullish momentum. Interestingly, the elder's impulse system has turned bullish from a bearish mode. On a 75-minute chart, the Nifty formed a doji candle. This may not show a significant impact on the trend. But, the rally because of the banks, which are coming out of an oversold condition. Stay positive with light position size.

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

manager)