Nifty hits another all time high
Previous day’s bearish engulfing candle failed to get a confirmation for its bearish implications; Current unbelievable rally may attract sharp profit booking any time
image for illustrative purpose
The equities dramatically rallied on a weekly derivative expiry day. Short-covering and fresh longs were the reasons for Thursday’s bounce. The Nifty closed at 22217.45 with 162.40 points or 0.74 per cent gain. Only Nifty and FinNify were negative on Thursday, with 0.21 per cent and 0.10 per cent, respectively. The Nifty IT and Auto indices were the top gainers with 1.94 per cent and 1.64 per cent, respectively. All other sectoral indices were up by 0.20 per cent to 1.6 per cent. The market breadth was positive as 1412 advanced and 1116 declined. About 105 stocks hit a new 52-week high, and 84 stocks traded in the upper circuit. HDFC Bank, Reliance, JioFin, and ABB were the top trading counters today in terms of value.
On a very high volatile session, the Nifty formed a fresh lifetime high of 22252.50 and registered its highest closing at 22236.5. The Index took support at the rising channel’s demand line. At one point in time, the Index recovered 377 points from the day’s low. Even after this strong bullish bounce, the volume was lower than the previous day. The interesting aspect of the past few days is that the positive days are not attracting the volume, but on a decline, volumes were higher. The last-hour bounce of 209 points attracted better volume but less than the opening-hour selling volume. The Index finally registered the highest close. With Thursday’s 377 points rally from the day’s low, the previous day’s bearish engulfing candle failed to get a confirmation for its bearish implications.
On the indicators set up, the hourly MACD has given a fresh bullish signal, and the daily MACD histogram shows an improvement in the bullish momentum. The daily RSI is back above 62.7 and in the bullish zone. However, the negative divergences in all time frames continue even though the Index is at a new high. The RSI is below Tuesday’s level. The current unbelievable rally may attract sharp profit booking any time, with an unexpected level. Only in case the Nifty closes below 22127 on a weekly closing basis, expect more consolidation and time correction within the range. Thursday’s sharp recovery from the IT, Auto and the Banks during the day led to the recovery. As the Index does not show any weakness in the trend, it is better to continue with the trend.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
