Nifty Forms Strong Bullish Candle

The equities extended the gains and closed higher. NSE Nifty gained by 283.05 points or 1.24 per cent and closed at 23,190.65. All the sectoral indices participated in the rally. Oil & Gas and Consumption indices gained 1.59 per cent each, are the top gainers. The Infra, Auto, FMCG, IT, Media Services, Metal, and Consumer Durable indices gained 1 -1.5 per cent. Only PSU Bank index gained less than 0.50 per cent. The India VIX is down by 5.66 per cent to 12.53. The market breadth is positive as 1,759 advances and 1,143 declines. About 59 stocks hit a new 52-week high, and 184 stocks traded in the upper circuit. KEI Industries, BSE, Mazdock, Polycab and Bharti Airtel were the top trading counters, in term of value.

The Nifty rallied further above 23,200 level. As expected, the rally was impulsive after a tight base. The index retraced above the 61.8 per cent of the prior downswing. This session’s move is negated the previous day’s exhaustion candle, Hanging Man’s implications. It formed a very strong bullish candle and closed decisively above the 50DMA. The RSI shifted its range into the bullish zone after October 2024. As the index closed near the day’s high, there is no weakness visible. By extending a rally over 61.8 per cent retracement, the index has given a first sign of reversal. Now, it must not decline below the 22,890. It may form a higher bottom around the recent 8 days’ tight base and bounce again, which will be confirmation of the end of the bearish trend. The hourly RSI is in the extreme zone at 87, which is a clear sign of the mature stage of the current upswing. The India VIX is also at the bottom is an indication of end of the swing. For now, stay away from building fresh positions.

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