Nifty Forms Hammer Candle

The headline indices ended flat in a volatile session, but the broader market indices outperformed. NSE Nifty was down by just 8.05 points or 0.04 per cent and ended at 24,610.05 points. The Realty index is the top gainer with 1.43 per cent, followed by IT index with 0.82 per cent. The Microcap, Nifty Junior, and PSU Bank indices gained over 0.50 per cent. On the flip side, the Media, Energy and Infra indices declined by over 0.50 per cent. The India VIX is down by 2.34 per cent to 13.78. The market breadth is positive as 1,438 advances and 1,367 declines. About 124 stocks hit a new 52-week high and 127 stocks traded in the upper circuit. ITI, Bharti Airtel, Reliance, Raymond and Waree Energy were the top trading counters in terms of value.

The Nifty continued to slip for the third consecutive day. It almost tested the 50DMA support. Importantly, it erased most of last Thursday’s gains. The 20-week average has been acting as strong resistance for the last two weeks. During the day, the index slipped below the prior swing high of 24,538. The index is also below the 23.6 per cent retracement level of the latest minor upswing. The higher volume is an indication of more profit booking. The index escaped the distribution day as the decline is limited to just 0.04 per cent. The Nifty recovered from the intraday losses in the last hour and formed a Hammer candle. In any case, a positive close the next day will come out of the last three days of inaction and indecisiveness. Only a close below the 50DMA of 24,488 is worrisome. It is also the 38.2 per cent retracement level. After 546 points gain last week, it is normal to consolidate in the range. Even after three days of decline, the index has not given any bearish signals. A close above 24,625 on Wednesday will clear the 24,857 resistance by the weekend. Stay positive above 24,489 and focus on IT and BFSI sector stocks.

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