Nifty on upside ride with no pulls in sight

The stock market rally continues to go further high. IT stocks and the HDFC twins propelled today's rally. The Nifty gained 137.5 points or 0.96 per cent. Barring banks and metals were the laggards in today's market. The Nifty IT index gained by 3.31 per cent. Auto index up by 2.61 per cent. The pharma and FMCG also were also up by over 1 per cent. As the index reached new peaks, the volatility is also increased. The India VIX is up by 8.44 per cent and closed at 22.38. The market breadth is positive in favour of advances. As many as 1,176 stocks closed higher and 768 stocks declined in today's market.

The benchmark moved another 1 per cent higher and formed a hanging man or a dragonfly doji. Though it is a bearish candlestick pattern in normal conditions, unless it gets a confirmation candle by closing below it, better ignore the candle. In recent history, the bearish patterns failed to get the confirmations.

After opening with 127 points gap up, the Nifty traded mostly in first hour's trading range. It also sustained above the gap area. All the intraday dips attracted the buying interest.

The short average is further trending upside. The Nifty closed at upper Bollinger band. Interestingly, the bands are beginning to expand. This shows the trend may continue further.

The RSI has reached the near previous high, and there are no divergences seen. The MACD line is above the signal line, and the histogram shows the increased bullish momentum. The +DMI turned up, and the ADX shows very strong trend strength. The Pring's KST indicator is the only one showing the negative bias in the index. The dragonfly doji is a sign of caution. Maintain the strict stop loss for the long position. Unless the market closes below the previous bar, it continues the long positions.

(The author is a financial journalist, technical analyst, trainer, family fund manager)