Nifty forms most bullish candle

The above estimated GDP data has pushed the market into new lifetime highs. NSE Nifty gained 355.95 points or 1.62 per cent and closed at 22,338.75 points. Barring Nifty IT, Pharma, and Media indices, all other sectoral indices were closed with a decent gain. Bank Nifty, FinNifty, PSE, Auto, and Energy indices were by over two per cent. The India VIX is down by 2.17 per cent. The market breadth is positive as 1,673 advances and 919 declines. About 108 stocks hit a new 52-week high, and 139 stocks traded in the upper circuit. HDFC Bank, Tata Steel, SAIL, and Reliance were the top trading counters on Friday in terms of value.

An expected exuberance in large-caps has resulted in a huge up move. The new month has begun on a very positive note. The Nifty closed at the day’s high and above the prior all-time high. The most positive factor in this breakout is the RSI has moved above the prior high, and negated the bearish divergence. The MACD has given a fresh, bullish signal. Though the volume is lower than the previous day, they are above average. With this, the market structure has changed to the confirmed uptrend from the Uptrend under pressure.

The Nifty has formed the most bullish candle as the open is low and the close is near the day’s high. It registered the highest gaining day after January 29. As mentioned in the previous column, there is no weakness visible, so we need to be cautious. As the Bank Nifty advanced by 2.13 with low volume, it is creating some doubts about the sustained rally. The Banks and Financial institutions have the higher weightage in the Nifty. At the same time, the defensive sectors, IT and Pharma, did not participate in Friday’s massive rally. Stay on with the large caps. The Nifty has to form a lower low for weaker signals. Otherwise, continue the long positions with a trialing stop loss.

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