Nifty may consolidate for some more time

The equity market closed on a flat note for the second consecutive day on the event of monthly expiry. The Nifty closed at 16,636.9 points with just 2.25 points gain. The Bank Nifty also closed flat with 31.30 points gain. The FMCG and Energy indices gained over 0.50 percent. The Metal index is the top loser with 1.17 per cent. Nifty Pharma, Auto, Infra, and IT indices closed on a negative bias. The overall market breadth is at 1:1, as 977 advances and 938 declines. About 54 stocks hit the new 52-week high, and 181 stocks traded in the upper circuit.

The equity market rallied during the current month with no major correction. It broke the two-month-long consolidation at the beginning of the month, and it rallied 874 points or 5.75 percent. Unlike previous months, the Nifty formed most bullish candles and very few bearish or indecisive candles during the month. It is the most promising after May 2021.

The benchmark index is consolidating for the last five days. The Nifty formed two consecutive indecisive bars in the last two days. The previous week's shooting star candle failed to get the bearish confirmation. But, it formed a hanging man candle in the current week and signalled that the market might consolidate before taking a decisive direction. The two back to back bearish candles on a daily chart indicating the exhaustion in the market. During the last Friday, it faced resistance at the upward channel resistance line, and formed a parallel high. In any case, the index falls below 16376 levels, and the double top pattern breakout will be a reality. In such a case, the Nifty may retest the two-month long consolidation breakout point. As long as this level is protected, the index may consolidate for some more time. A move above 16,713 points will resume the uptrend with a target of 17,000-17,265 zone.

(The author is financial journalist, technical analyst, family fund

manager)