Nifty hovering at 38.2% retracement level
For the 4th successive session, NSE Nifty has formed a higher low and higher high candles; It also moved above the slopping trendline resistance; Now, 18265-288 zone (Valley point and the 50DMA) will act as a crucial resistance
image for illustrative purpose
The Union Budget expectations keep the market alive, and the benchmark indices moved above the key levels. NSE Nifty gained by 112.05 points or 0.62 per cent and closed at 18165.35. The PSU Bank index is the top loser with 1.25 per cent. The Nifty Energy and Auto indices also closed negative zone. Interestingly, Only the Metal index is able to gain over a per cent. All other sectoral indices gained by 0.5 per cent to 0.80 per cent. The market breadth is positive as 1038 advances and 866 declines. About 38 stocks hit a new 52-week high, and 82 stocks traded in the upper circuit. HDFC Bank, Reliance, and Andani Enterprises were the top trading counters today in terms of value.
The Nifty closed at a 10-day high and decisively above the 20DMA. Important technical development that occurred today is that, for the first time in the last seven weeks, the Nifty moved above the previous week's high. At the same time, the MACD has given a fresh buy signal, and the RSI moved above the 50 zone. The positive divergence in the RSI has got confirmation for its bullish implications. The weekly RSI closed above the valley point level of 55.81. For the fourth successive day, the Nifty has formed a higher low and higher high candles.
It also moved above the slopping trendline resistance. Now, the 18265-288 zone (Valley point and the 50DMA) will act as a crucial resistance. With these key technical development, the Nifty moved near to the 38.2 per cent retracement level. As we mentioned earlier, a close above 18191, the target is open to 18324. Before that, it has to close above 18265, which is the valley point of the double bottom. A day before the weekly expiry, the declined Open Interest shows that long unwinding is happening. The volumes also lowest in the last ten days. This shows the rally is because of the unwinding of the positions, as risks are gaining strength before the Budget. From now, the daily ranges will increase, and the intraday swings will be very misleading and sharper in nature. As said before, before the union budget, the equity market moved positively to a neutral bias. It is time to trade cautiously positively.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
