Nifty may consolidate for some time
After over 1,450 points rally, the traders tried to take out the partial profits. Before the weekly expiry, the unwinding positions were seen in the derivatives market
image for illustrative purpose
The equity market witnessed a profit booking after hitting a new lifetime high. The NSE Nifty closed at 17,076.25 with a loss of 55.95 points. The Nifty Metal and IT sector indices led the weakness by declining 1.79 percent and 1.33 percent respectively.
Pharma index down by 0.17 per cent. The Realty index up by 5.57 per cent, and all the other indices advanced by over 0.50 percent.
The overall market breadth is negative as 1016 declines and 915 advances. About 113 stocks hit a new 52-week high, and 106 stocks traded in the upper circuit. India VIX touched 15.63 levels before settling at 14.18 indicates the volatile moves are on the cards.
The Nifty scaled another lifetime high of 17,225 points. It almost met our earlier target of 17,265 points. With a profit booking, it declined about 150 points from the top. After over 1450 points rally, the traders tried to take out the partial profits.
Before the weekly expiry, the unwinding positions were seen in the derivatives market. Though it declined 150 points from the day's high, it has not given any bearish signals yet on a daily time frame. A close below 17,055 may give a weak sign.
The MACD has given a sell signal on the hourly chart, but the RSI is still above the 60 zone. No divergences visible. A day before the weekly derivatives expiry, the NSE Nifty has formed a bearish candlestick. For the last two days, the index recording higher volume, the open interest decline on negative market breadth.
The heavyweight Nifty Bank has formed a bearish Shooting Star candle. These signs are indicating that the market may enter into consolidation for some time. The Nifty met 90 per cent of our target, and better wait for a clear trend continuation confirmation signal.
A move above 17,225 is a positive sign that will continue the prior uptrend. As the major indicators are in the overbought condition, the Nifty may consolidate for some time before taking a decisive trending direction. As the weekly derivative expiry is in place, the volatility may rule the market.
(The author is financial journalist, technical analyst, family fund manager)
