Nifty Forms Strong Bullish Candle
Rally to continue if Bollinger bands turn upside; It must close above 50DMA of 23,783 level, also watch the RBI policy and market reaction to it; Be with a positive bias with strict stop loss
Nifty Forms Strong Bullish Candle
The equities rallied after two days of consolidation. The Nifty rallied by 378.20 points or 1.62 per cent and closed at 23739.25. The FMCG and Consumer Durable indices were down by 0.25 per cent and 0.17 per cent, respectively. All the other sectoral indices ended on a positive note. The PSE and Oil and Gas indices gained by 2.7 per cent each. The PSU Bank, Infra, Energy, FinNifty, and Private bank indices gained over two per cent. All other indices registered 0.55 per cent to 2 per cent gains. The India VIX is down by 2.33 per cent to 14.02. The market breadth is positive as 1951 advances and 863 declines. About 48 stocks hit a new 52-week low, and 126 stocks traded in the upper circuit. Kalyani Jewellers, HDFC Bank, Reliance, ICICI Bank, and Bajaj Finance were the top trading counters, in terms of value. After two days of consolidation, the Nifty rallied sharply and decisively closed above the 200 EMA. The index is now almost at the 50DMA. This session’s rally was with an all-round participation.
The volumes were higher in the last four days. On a 1.62 per cent up day, the Open Interest declined, which is an indication of short-covering. The Nifty has formed a strong bullish candle and registered its highest closing after January 3. It closed above the Budget Day high and above the upper Bollinger band. The 20DMA flattened. If the Bollinger bands turns upside, expect the index to continue the rally. The Index has rallied by 976 points or 4.28 per cent from last Monday’s low. The previous counter-trend rally was 6.85 per cent during the last November. Let us watch from now on as the event risks are lined up. Reliance, HDFC Bank and L&T have contributed 155.2 points in this session’s rally. To continue the positive bias, the Nifty must close above the 50DMA of 23,783 points. It is also important to watch the RBI policy and the market reaction to it. Be with a positive bias with strict stop loss.
(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)
