Nifty Forms Strong Bullish Bar

The domestic equity indices recorded one of the best gaining weeks in recent history. NSE Nifty gained by 159.75 points or 0.69 per cent and closed at 23,350.40. Only Consumer Durables and Metal indices declined by 0.77 per cent and 0.55 per cent, respectively. The Media, Microcap, and Smallcap indices are the top gainers, with over 2.06 per cent gains. The PSE, Oil and Gas, and CPSE indices gained over 1.50 per cent. A majority of indices gained over one per cent. The India VIX closed at 12.57 after testing the 10.69, the lowest level in the recent past. The market breadth is positive as 2120 advances and 804 declines. About 49 stocks hit a new 52-week low, and 192 stocks traded in the upper circuit. ICICI Bank, Kotak Bank, Manappuram, BSE, and HDFC Bank were the top trading counters in terms of value.

The Nifty rallied 945.15 points, or 4.21 per cent, during the last five trading sessions and recorded its most significant gains since July 2022. It formed a strong bullish bar and closed above the 10-week average. The volumes were higher than the previous week and above the average. This shows a strong pullback. The Mid, Small, and Microcap indices gained 7.6 per cent to 8.6 per cent, respectively and it’s the highest in recent history. The Bank Nifty closed at the pivot of a Double-Bottom pattern. The Nifty tested the 78.6 per cent retracement level today and reacted. On an hourly chart, the index has been in an extremely over-bought condition for the last two days. This may result in a significant profit booking.

In any case, the index close below the prior day’s low will be negative. As long as it makes higher lows, be with a positive bias. Today’s volume is massive, and most of the volume was recorded in the last 90 minutes. The Bollinger bands began to expand as we expected earlier. The Nifty is now 1.66 per cent above the 50DMA. The prior high is just 1.70 per cent away. If the index closes above 23,808, it will form a higher high, which is a trend reversal sign. The 23,063-23,133 zone will act as a crucial support zone. If the index closes below this zone, expect a decent correction again. On the upside, the 23,808 is the crucial resistance. Be with a positive bias as long as it makes higher lows.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)