Mkts Hovering In Non-Directional Mode

As expected, the RBI announced the liquidity measures in the monetary policy. The Market did not react to the policy, but the profit booking on the weekend led the flat to a negative closing. The Nifty closed at 24677.80 with 30.60 points or 0.12 per cent decline. The Metal and Consumer Durable indices gained by 1.23 per cent and 1.09 per cent.

The Auto Small-cap indices are up by 0.94 per cent and 0.82 per cent, respectively. The Microcap index tested a new high. On the flip side, the Media, Services, and IT indices were down by less than 0.34 per cent. The India VIX also declined by 2.67 per cent to 14.14. The market breadth is positive as 1694 advances and 1127 declines. About 105 stocks hit a new 52-week high, and 150 stocks traded in the upper circuit. BSE, ITI, HBL Power, and HDFC Bank were the top trading counters in terms of value.

The Nifty formed an inside bar on an event day. The first two hours of trading were very volatile as the RBI announced monetary policy. It traded in the over 130 points range. However, the price action is limited to the first hour’s range. The trading volumes were subdued. As the index formed an inside bar and a small candle, it did not provide any directional bias. It is still much above the 50 DMA. On a weekly basis, it failed to close above the 50 per cent retracement level (24770), and the 20-week average (24722). The Nifty traded in 849 points range this week and ended a five-day winning streak. It gained 546.70 points during the week.

The RSI is back in the neutral zone. The weekly RSI is also in the neutral zone. As the index has broken out of an inverted head and shoulders pattern and sustained for the second, it is a positive fact. To get confirmation, the RSI must close above the 60 zone for at least two days. A close above 24770 will continue the rally. The immediate resistance is at 25126, which has the highest probability next week. On the downside, only a move below the 20DMA of 24051 or a recent low of 23873 is negative. Till then, be with a positive bias. Several stocks are making their new highs with improved relative strength. Focus on them.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)