Nifty hovering in consolidation mode

Nifty never closed below its opening in October. Out of 10 years, it closed 9 yrs above the open. In 15 years, 73% of the time, and in the last 20 years, 70% of the time, it closed higher than it opened

Broader Participation

♦ All the sector indices closed positive

♦ India VIX declined by 3.39 per cent to 10.69

♦159 stocks touched 52-week high

♦ 140 stocks traded in upper circuit

With the broader market participation, the equity benchmark and sectoral indices closed in the positive territory. NSE Nifty is up by 79.75 points or 0.40 per cent and closed at 19,811.50 points. Only the PSE and CPSE indices rose over one per cent. All other sector indices registered modest gains. The India VIX declined by 3.39 per cent to 10.69. The market breadth is positive. About 159 stocks touched the 52-week high, and 140 stocks traded in the upper circuit. IRCON, FACT, IRFC, and HDFC Bank were the top traded counters today in terms of value.

The Nifty tested the gap area once again and failed in closing. Even though, it opened at a 17-day high, It faced selling pressure in the afternoon session. The Nifty closed above the three-day high and negated the Evening Star implications. The hourly chart shows the selling pressure was with higher volumes. It formed a bearish candle in the first hour itself. It also failed to move above the first hour high.

The 61.8 per cent retracement level of the prior fall is at 19882. The gap area of 19,848-878 has become a crucial resistance zone. The index is now closed above the 20DMA. The MACD shows an improved bullish momentum as the index closed at the 17-day high.

All the sector indices closed positive, showing the broader market participation in today’s rally. As mentioned earlier, October month is the most bullish month historically. In the last five years, the Nifty never closed below its opening in October. Out of 10 years, it closed nine years above the open. In 15 years, 73 per cent of the time, and in the last 20 years, 70 per cent of the time, it closed higher than it opened.

This October, Nifty opened at 19,623 points. History says there is a highest probability of closing above 19,623 on October 31. With this historical data, we can assume that the Nifty will continue the consolidation even in the second half of this month. Stay on the neutral bias as long as it trades above 19,500 and below 19,883 points, and apply range-bound strategies.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)