Nifty forms strong bullish candle
Benchmark index erased most of its last week’s losses; As it retraced 61.8% of the prior fall and closed just below it, the bearishness is almost vanished
image for illustrative purpose
The equities rallied for the second successive day. The IT majors moved up by 2-3 per cent helping the index close higher on Monday. NSE Nifty gained by 111 points or 0.61 per cent and closed at 18,314.40 points. The Nifty Metal and IT indices were the top gainers, with 3.19 per cent and 2.49 per cent, respectively. Nifty Pharma, Infra, Realty, and Energy indices are up by over 0.70 per cent. Bank Nifty and FinNifty are down by 0.18 per cent each. The Advance-Decline Ratio stood at 1.01. About 72 stocks hit a new 52-week high, and 77 stocks traded in the lower circuit. Adani Enterprises and Adani Ports were among the top trading counters today. HDFC Bank, Siemens and ICICI Bank were the top trading counters today in terms of value.
The Nifty moved above the four-day high and closed at the three-day high. It formed a strong bullish candle with the help of the IT stocks rally. Adani Twins and Metals also participated in today's rally. In the afternoon session, the Nifty traded in the range, as the rally 150 point rally happened in the morning session. The hourly RSI has flattened for the whole day. Even after 111 point rally, the daily MACD line is still below the signal line.
The Nifty erased most of its last week’s losses. It retraced 61.8 per cent of the prior fall and closed just below it. If the index is able to close above 19,305 decisively on an hourly basis, it tests the prior swing high of 18,458 points. But an hourly closing below 18,260 points, with a high volume, will be negative.
As it retraced 62 per cent, the bearishness is almost vanished. Now, the 18,060-18,458 range is crucial for the index for a directional bias. Either side breakout will attract the volumes. The Beaten down sector index Nifty IT erased last month’s losses and closed almost at the previous swing high is a positive for the market. As the monthly expiry is nearing, the VIX also began to rise mildly; any sharp spike is not good. For now, stay on a minimal position size. Focus on IT and Metal stocks, which are in good shape and registered breakouts.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
