Market volatile, may touch new high soon

THE stock market closed above surged for the third consecutive day. Metal, Reliance ad Bajaj twins led the market today. The Nifty Metal index hit a new high as the monthly production data recorded an upswing. The Nifty went sharply higher by 326.5 points or 2.19 per cent and closed at 15,245 levels. Barring Auto stocks all the sectors were in positive mode. The Nifty Auto index fell by 0.66 per cent. Metal index was up by 3.34 per cent. After a brief pause, the PSU bank index went up by 3.16 per cent. BankNifty and FinNifty were up by 2.68 per cent and 2.78 per cent. As many as 44 of Nifty 50 stocks closed in the positive territory. The overall market breadth was also positive as 1,195 advances and 685 declines were recorded. All five Auto stocks and BPCL in Nifty closed with losses.

The Nifty crossed the Thursday high or the prior swing high. The three continuous gap ups look very interesting on the chart. It filled the Friday gap. It also closed above the 61.8 retracement of prior fall and above the 20DMA decisively. The Nifty also moved above the previous week's high. It is interesting to see that the bearish engulfing pattern will be negated or not. The Bollinger Bands are indicating another huge move is on the cards in the near term. The Nifty also has broken out of a downward channel. It is also bouncing from the 2nd February gap area. Interestingly, the closing lifetime high is at 15,314. It is just at an arm's length from now. All these positive aspects point to a bright near future. Nothing looks negative. Even the fundamentals are changing, as the Price-Earning calculation has changed soon. With these new methods, the Nifty suddenly will become 12 per cent cheaper. A technical breakout and the revised fundamentals will have a positive impact for some more days. Even the Dollar index, in pullback mode, began their shopping again. Only a close below 20DMA (15,017) is a caution again.

(The author is a financial journalist, technical analyst, trainer, family fund manager)