Nifty Comes Out Of Oversold Zone

The equities indices closed flat on a dull trading day. NSE Nifty closed with just 7.80 points gain at 22,552.50 points. The Nifty Media index is the top gainer with 1.83 per cent. The Microcap, and Smallcap indices rose by 0.92 per cent, and 0.67 per cent, respectively. The Oil and Gas, Metal indices were up by 0.55 per cent and 0.43 per cent. On the flipside, the Realty and Consumer Durable indices went down by 1.19 per cent and 1.02 per cent. the IT, PSE, CPSE, and Healthcare indices were down by over half a per cent. The India VIX is down by 1.86 per cent. The market breadth is positive as 1818 advances and 1093 declines. About 37 stocks hit a new 52-week low, and 229 stocks traded in the upper circuit. Reliance, Data Patterns, BSE, Infosys and Tata Steel were the top trading counters in terms of value.

Nifty closed positively on the third straight day on a volatile and rangebound trading day. But the volumes were much lower in the last four days. The index has formed a long upper shadow candle, indicating the profit booking at the higher levels. The index has formed a lower high and lower low on a weekly chart. It gained 427.80 points or 1.93 per cent last week and came out of an oversold condition. The Nifty filled the last Friday’s gap area, and the 24th February gap is yet to be filled, which is an important level for a reversal. Now, the index is 2.59 per cent below the 50DMA and 0.86 per cent below the 22748 (20DMA). A close above the 20DMA will fill the 24th February gap area and confirm the reversal. The index breadth is negative, butthe heavyweight stock Reliance led the market. It is important to continue the positive bias above 50DMA. A close below the prior day low will be negative, and it can resume the downtrend. Stay neutral to positive for another two days.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)