Nifty: Bulls are riding the trend

The frontline indices closed higher on continued buying interest. The Nifty closed higher by 87.7 points or 0.54 per cent and settled at 16220.60. Barring metal and realty, all the sectoral indices closed higher. The infra index is the top gainer with 1.16 per cent. A majority of indices closed with half a per cent gains. Metal is down by 0.88 per cent. The market breadth is positive as 1132 advances and 937 declines. About 29 stocks hit a new 52-week high, and 91 stocks traded in the upper circuit. Reliance, M&M and L&T were the top trading counters on Friday in value terms.

The Nifty closed higher after a positive gap opening. Two consecutive gap-up openings show bulls are riding the trend. The Nifty decisively closed above the 50DMA. The previous day's hanging man candle failed to get the bearish confirmation. Even today, the strong close is an indication of bullish strength. There are no divergences visible now. But, Friday's price action is confirmation of our suspicion of exhaustion of the counter-trend. The index closed below the opening level. In fact, the open is almost high of the day. On 75 minutes chart, it traded mostly in the first bar's range. Today's sideways momentum. It clearly shows the bulls are tired of pushing the further price upside failed. At the same time, bears are not active on the street to pull down the index. Two major indices, Nifty and Banknifty, are traded in a similar style.

The RSI has closed above the 55 zone decisively is a positive sign. The MACD is almost at the zero line is another positive for the index. The Anchored VWAP resistance is at 16330, which is major resistance. In any case, if the Nifty closes below Friday's low next week, the index may take entry into consolidation before taking another leg of directional move on either side.