Nifty forms Dragonfly Doji

On a weekly derivatives expiry day, the domestic equity market traded in sideways on lower volatility. The NSE Nifty went up by 45.45 points or 0.25 per cent and closed at 18257.80 poins. The Bank Nifty and the FinNifty closed with a 0.67 per cent and 0.39 per cent decline. The Realty index also fell by 0.72 per cent. The Metal index is the top gainer and protected the market from a decline with a 3.48 per cent gain. The Pharma index is up by 1.57 per cent and the Energy index advanced by 1.23 per cent. Other sectoral indices up by less than half a per cent. The market breadth is positive as 1077 advances and 956 declines. About 125 stocks hit a new 52-week high and 102 stocks traded in the upper circuit. As many as 120 bulk deals happened today.

The Nifty continued its rally for the fifth successive day and closed the highest level after October 26. The Index has formed a perfect Dragonfly Doji, which is a reversal candlestick pattern. After three majors and index heavyweights declared positive to neutral Q3 results, the market was not enthusiastic about moving higher. In fact, the Nifty IT index closed flat. BFSI and Realty sectors dragged the market. The Nifty failed to move above the first hour high and mostly traded sideways. Like the previous day opened with a positive gap and traded in the range. On a 75-minute chart, the MACD line has moved below the signal line, and the histogram shows an increased bearish momentum. But, as the Index has formed a higher high and higher low candle, it has given any bearish signals. It closed above the prior swing high decisively. The supports has risen to 18087-163 zone. The Nifty's closing is just another 220 points away. The Dragonfly has given only caution of the trend has exhausted. Still not a time to take a bearish stance. But, take out some profits at the current levels. In any case, the Nifty closes below the support zone, be with the trend. As stated earlier, any positive close tomorrow will likely hit the new high.

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