Nifty forms higher lows, higher high
Technical indicators signal sustenance of positive bias; As the Nifty sustained above Friday's low and erased all losses of six days, the mkt status has changed to a rally attempt; Elder impulse system has formed a bullish bar
image for illustrative purpose
In line with global markets, the domestic equity markets rallied and closed above the six-day high. The Nifty is up massively by 386.95 points or 2.29 per cent and closed at 17274.30. The Nifty Metal index is the top gainer with 3.13 per cent. Bank Nifty, Fin Nifty, IT, and the Media indices gained over 2.5 per cent. Auto, GMCG, Realty, Energy and the Commodities indices rose by over 2 per cent. Other sector indices also closed with decent gains. The India VIX is down by 8.40 per cent. The Market breadth is extremely positive, as 1591 advances and 319 declines. About 50 stocks hit a new 52-week high, and 113 stocks traded in the upper circuit. Adani Enterprises, Reliance and Infosys were the top trading counters on Tuesday.
The Nifty erased all the losses of the last six days and almost filled the gap area. After opening with a positive gap, the index has formed higher lows and higher high candles on an hourly chart. As the Nifty sustained above Friday's low and erased all losses of six days, the market status has changed to a rally attempt. As the open interest was declined, the rally mainly due to the short covering. After a big gap-up opening, the Nifty mostly traded around 17250. Most of the indicators are bouncing from the oversold conditions. As we said in the previous column, the Nifty closed above the Friday high and above the outside bar and given a directional bias on the upside. It also closed above the 38.2 per cent retracement level, which is a positive indicator for the index.
The next level of resistance is at 50DMA or 50 per cent retracement level of 17445-422 zone. Above this zone, the market may retest the slopping trend line resistance. But, the highest probability is that the index may consolidate between the 16747-17445 zone for some period. The RSI is back to near the 50 zone. The Elder impulse system has formed a bullish bar. The Relative momentum is above the 100 zone, and RRG RS is rising. With these technical developments, the market may sustain the positive bias for some time. The only case of negative global developments may influence our markets. From next week onwards, the earnings season begins. The positive acceleration may support the market rally.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
