Nifty not showing any weakness in the trend

The equities have witnessed a massive rally, and collapse in the last hour. The Nifty gained by 203.90 points or 0.92 per cent. Barring media (-0.70 per cent), all other sector indices closed positively. The PSU Bank index is the top gainer with 2.62 per cent. The CPSE and PSE indices are up by 1.54 per cent and 1.4 per cent respectively. The auto, pharma indices gained by over one per cent. The other indices closed with 0.35 per cent to one per cent gains. The India VIX is up by 1.02 per cent to 12.83. The market breadth is positive as 1417 stocks advanced and 1196 declined. About 118 stocks hit a new 52-week low and 132 stocks traded in the upper circuit. HDFC Bank, Reliance, Bajaj Finance, and ICICI Bank are the top trading counters on Thursday in terms of value.

The Nifty erased the history of Jan-March topping formation, as it tested the previous high on Thursday. But it failed to close at the day’s high as selling emerged in the last hour. On the last trading session of the financial year, the index opened with a positive gap and rallied by over 390 points. It formed an open low candle and a long upper wick candle. Thursday’s move is the highest daily range in recent times. It traded in the 352.4 points range. An interesting fact is that Thursday’s massive rally is the lowest volume in the week. On a weekly basis, too, the volumes were lowest after the third week of November. The last hourly intense selling pressure attracted more volume. The Nifty has given up more than 50 per cent of the day’s move in the last hour. On a strong, bullish day, the advance-decline ratio was just 1:1.

As we suspected earlier, the fund houses pushed the prices to manage the NAVs. During the financial year, the Nifty gained by 4971.45 points or 28.64 per cent. Except for August and October all other months, the Nifty registered decent gains. March 2023 ended with a long-legged Doji candle. The current monthly candle is like an evening star with a small body and small shadows. By closing just above the previous month’s high, the index is not showing any weakness in the trend. However, the candle structure shows exhaustion.

The last five weeks range of 21710-22527 is crucial for the market. A decisive close above 22527 will continue the rally and can test 22861 during the month. The RSI reached near 60, and if the range shifts to the strong bullish zone, the rally will continue. After hovering around the zero line for a week, the MACD line is about to cross the signal to give a fresh, bullish signal. We can consider Thursday’s move as just adjustments in the portfolio and the monthly expiry trades. Let us wait for next week’s opening. If it trades positive for the first hour and sustains above the first hour’s high, it is a positive sign. Any close below the first hour’s low will be negative. Be with the trend and apply strict risk management principles at higher levels.

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