Nifty forms lower high & lower low

The equity market bounced from a gap-down opening and initial losses. With the RBI clarification on RBL Bank, the sentiment improved. The Nifty gained by 82.50 points and settled at 17086.25. The Nifty Pharma is the top gainer with 1.62 per cent. The Nifty IT, Bank Nifty, and Fin Nifty gained over 0.58 per cent to 0.97 per cent. The Media index is the top loser with 1.06 per cent. The FMCG and Metal indices closed with moderate losses. The VIX is up by 6.01 per cent. The market breadth is positive as 1176 advances and 880 declines. About 116 stocks hit a new 52 week high, and 195 stocks traded in the upper circuit.

Market recouped all its opening losses and closed in the positive territory. The RBI's invention in RBL Bank last Friday after the market dented the sentiment initially. The Nifty tested the 16833 levels and bounced sharply as RBI clarified that the Bank's financial health remains stable and satisfactory. It also mentioned in its statement that the bank is well capitalised, with a 16.33 per cent Liquidity Coverage Ratio and 76.6 per cent Provision Coverage Ratio. With this statement, a sudden recovery was witnessed in the market. The Nifty recovered almost 280 points from the day's low, and the Bank nifty recovered more than 900 points. In the last two hours, the Nifty faced resistance at the channel supply line and formed two indecisive and bearish candles. It has formed a lower high and lower low candle, does not indicate any strong bullish signal. It also closed above the 8EMA, which does not indicate any strong bullish reversal. Interestingly, the 20DMA has turned up is a positive signal for the market.

The daily MACD has given a fresh buy signal. In any case, the Nifty moves above 17150 will be a positive sign, and it can test over 17300 level. The other positive is that the RSI is moving above the 45 and 9-period averages, which is a bullish sign. After a long time, the Mansfield relative strength indicator reached to just below the zero line. The volume is higher than the previous day is also bullish. As the stochastic oscillator all ready in the overbought zone. A move above 17183 will lead to a strong bullish bias in this scenario. But any negative close is weak.

(The author is financial journalist,

technical analyst, family fund manager)