Nifty forms Morning Star candle
It the counter continues for another 2 days, the benchmark index can test 19,344 points; If Morning Star gets confirmation, it will test the previous low with no time; The market has given an opportunity to book profits this week, utilise it
image for illustrative purpose
Positive Market Breadth
- 88 stocks hit a new 52-week high
- 145 stocks traded in the upper circuit
- Profit booking in the last hour
- Counter-trend is 6 days old
After opening with a big gap up, NSE Nifty traded in the very tight range. It registered a 97.35 points or 0.51 per cent gain and closed at 19,230.60 points. All the sectoral indices ended on a positive note. The Nifty Realty index is the top gainer with 2.54 per cent, followed by the Media index with 1.38 per cent. The small-cap index also gained by 1.21 per cent.
All other indices are up by less than a per cent. The India VIX is down by 1.74 per cent and closed at 10.88. The market breadth is positive. About 88 stocks hit a new 52-week high, and 145 stocks traded in the upper circuit. Zomato, Tata Motors, and HDFC Bank were the top trading counters today.
The Nifty closed just on the 38.2 per cent retracement level. After a gap-up opening, it traded in just 40 40-point range during the day. With profit booking in the last hour, the index closed below the opening and formed a Morning Star candle.
In any case, the Nifty opens with a gap down on Monday and closes negatively, which means the counter-trend consolidation is ending. As we expected, the Nifty has formed an inside bar, and the 30-week average acted as a strong support for now.
Now, the counter-trend is six days old. If it extends, it may extend another two days mostly. All the sectoral indices closed with gains, but limited to less than a percentage point. The volumes were lower today, but the last volume indicates the distribution or a massive profit booking. On a dull trading day, the last hourly high volume and big bearish is not a good sign.
Importantly, the index has formed lower highs and lower lows on an hourly chart. If the counter continues for another two days, the index can test the 19,344 points. If the Morning Star gets confirmation, it will test the previous low with no time. The market has given us an opportunity to book profits this week, utilise it, and pare the portfolio size.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
