Mkt enters overbought zone
image for illustrative purpose
The banks and financials led the market rally to another all-time high. HDFC Bank’s earnings resulted in a huge push to the broader market. NSE Nifty gained 146.95 points or 0.75 per cent and closed at 19711.45. The Bank Nifty and the FinNifty are up by 1.41 per cent, and 1.25 per cent, respectively; the PSU Bank index is the top gainer with 2.25 per cent. The Nifty Auto and Reality indices are down by 0.32 per cent and 0.03 per cent.
All other sectoral indices are up by 0.03 per cent to 0.8 per cent. The broader market breadth is positive as the advance-decline ratio is at 1.58. About 206 stocks hit a new 52-week high, and 80 stocks traded in the upper circuit. HDFC Bank, Reliance, and Infosys were the trading counters today in terms of value.
The bull’s dominance continued for another day with an over 150 points rally. Last week’s base breakout sustained for the second day; the Nifty closed above the previous day’s high. The volumes were lower than the previous day. On the strong move, there are no divergences and weaker signs available in any time frame.
The rally is mainly supported by the banks and financials. The Nifty opened with another positive gap and traded above the first hour’s range most of the time. This shows the trend strength is solid. The concern is the India VIX, up by 5.92 per cent today, and closed at 11.31, which is a caution signal. The index’s heavyweight, HDFC Bank’s earnings, resulted in the Bank Nifty bullish flag breakout. Now, the support has risen to 19,560 points, which is the last week’s breakout level. The 8EMA support is at 19,465 points. If the Nifty closes below the prior day’s low, 19562, it will give weak signals. Continue the momentum with a strict stop loss. The RSI is at 75.68, which is in extremely overbought condition. It tested the rising channel resistance line. A fresh breakout of the channel will continue the rally to further heights. As long as it trades above the prior day’s low, stay with the trend.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
