Nifty forms strong bullish candle in tight consolidation zone

The NSE Nifty traded with increased volatility during the last week. It lost 100.15 points or 0.63 per cent. Thursday's big bullish candle at a low volume is a concern for the continuation of the trend. The surge in metal stocks and the IT stocks rally created a positive sentiment. The rally in the global market also acted as a sentiment booster. All the sectoral indices closed in positive territory. The Metal index rallied 2.99 per cent. The IT, Realty, Infra, Media, and Smallcap indices are up by 1.5 per cent. India VIX declined by 10 per cent to 11.8850. The overall market is positive as 1,346 advances and 615 declines. About 176 stocks hit their new 52 weeks high and 188 stocks traded in the upper circuit.

The Nifty is back to above 20DMA levels. We suspected this probable bounce as the Nifty closed at the support after a decent recovery on Tuesday. It moved above the 20DMA and its still languishing in the middle of the broad consolidation range. It closed above the previous day's high, after retracing almost 90 per cent of the previous two days fall. It formed a strong bullish candle in the tight consolidation zone. The benchmark index is indecisive in moving either side for almost 25 days, and the swings within the consolidation are limited to three to four days. Let us wait and see this time, and the price will meet this time again. In any case, the positive sentiment continues, the index may retest the 15,900 level.

The RSI is bouncing from the historical support of 45, which is another positive factor. The only concern is again the volume. Today's 150 gain with a low volume gives us an element of doubt. In any case, the Nifty closes below the 15,725 points, and the downside move may resume. Friday's closing may give some indications for the near future. Stay positive for the next two to three days. Beyond that, we can't forecast the price movement for now.

(The author is financial journalist, technical analyst, family fund manager)