Nifty Hovering In Non-Directional Mode

Led by banks and financials, the market traded in positive territory on first session of the current week. NSE Nifty gained by 111.55 points or 0.50 per cent and closed at 22,508.75 points. The Nifty Pharma, and Healthcare indices gained by 1.56 per cent and 1.51 per cent, respectively. The FinNifty is up by 1.03 per cent. The Private Bank index, Auto, Metal, Commodities, Midcap indices advanced by over half a per cent. On the flipside, the Media and Microcap indices are down by over half a per cent. The Realty, PSU Bank, and FMCG closed negative with modest losses. The market breadth is negative as 1,781 declines and 1,134 advances. About 433 stocks hit a fresh new 52-week low, and 209 stocks traded in the lower circuit. Reliance, HDFC Bank, IndusInd Bank, ICICI Bank, and Bajaj Finserve were the top trading counters in terms of value.

The Nifty traded within the defined range. It tested the 20DMA and failed to close above the prior day’s high. Even though the index gained over a hundred points, the volumes were lowest in the last month. It formed an open low candle, which is a bullish sign. The consolidation is now seven days old. As mentioned earlier, this consolidation may register a breakout on either side, in a day or two. It oscillated around the 8EMA during this tight-range consolidation. The 20DMA is at 22,561 points, which acted as resistance. As the index has not given any directional bias, it is better to avoid highly leveraged positions. The RSI is back in the neutral zone. The Nifty traded in the first hour’s range. It experienced profit booking in the last hour. As expected, the Nifty tested the 22,570 points. Now, it must close above the 20DMA of 22,561 with a higher volume. Above this, the index may test 23,000 levels. But a negative close will test the tight-range support of 22,314. As the index is still in the range, apply neutral strategies. Be stock-specific to banks and financials.

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