Nifty Hovering In Non-Directional Mode

After a massive decline on last Friday, the benchmark index on Monday closed flat to positive. The Nifty gained by 18.45 points or 0.08 per cent and closed at 22,143.15 points. The PSE, Metal, Realty indices gained over one per cent. The IT, Consumer Durable, Commodities, and CPSE indices gained over half a per cent. On the flipside, the Media is down by 1.10 per cent, is the top loser. The Microcap, Oil and Gas indices declined by 0.82 per cent and 0.80 per cent respectively. The India VIX is down by 1.06 per cent. The market breadth is negative as 2,071 declines and 880 advances. About 963 stocks hit a new 52-week low, and 357 stocks traded in the lower circuit. BSE, Polycab, Reliance, Narayan Hrudayalaya, and HDFC Bank were the top trading counters in terms of value.

The Nifty closed flat after a volatile trade. Reliance, and HDFC Bank were negative and dragged the index on the downside. These two stocks protected the much bigger fall on last Friday. The Nifty formed a Hammer candle at the bottom, indicating a potential reversal. Volumes were lower than the previous day. The index tested the psychological level of 22,000 and bounced over 100 points. The RSI has also bounced from the extreme zone of 20. On an hourly chart, the RSI has bounced from the extreme level of 13, resulting in the price bounce. Overall, market breadth is negative, and as the small-cap and micro-cap indices were negative, the selling pressure continued in this space. As the index closed at the previous day’s low, the reversal signal has a remote chance. But, a move above the high of 22262 on Tuesday will confirm the reversal. If the volumes increase, it will be a positive factor. On the upside, the targets are open to 22430 and 22693. In any case, the index closes negative and below 22000, it can test the 21800-736 zone of support. Expect a short-covering bounce as the RSI is in an extreme oversold condition. The downside has limited possibility, and on the upside, a confirmation is needed. Stay neutral till the directional bias emerges.

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