Nifty on upswing for 2nd day; Set to consolidate further
Immediate resistance level is placed between 14,635 and Monday’s high of 14,665
image for illustrative purpose
INDIAN stock market continued its positive strength for the second day. The Nifty recovered another 76.65 points and closed at 14,581.45. The Auto, FMCG, Realty, Media and the PSU Bank indices were the laggards in today's market. Pharma index gained most by 1.40 per cent. Banknifty and FinNifty went up by 1. 07 per cent and 1.17 per cent respectively. The overall market breadth is negative as 1,117 declines and 761 advances were recorded. India VIX was up by 2.1 per cent.
In a truncated week, the Nifty lost 294 points or over 1.9 per cent in the last four trading sessions. The Covid-19 tremors were affecting the market sentiment, with around two lakh cases being registered, and the partial lockdowns in major metros are the main culprit for market fall.
On Monday Nifty opened with a very big gap down and lost 524 points, which is the biggest fall after 26th February. The Nifty took support at 100DMA and is holding it for the last three days. The last two days of price actions were limited to Monday's range. The Nifty opened with neutral to positive today. The Nifty did not sustain at the higher levels in the first half and bounced in the afternoon, and closed above the previous day high.
For the last two days, it formed a higher high and higher low candle, which is positive. The Nifty also retraced almost 50 per cent of the Friday-Monday fall. On the weekly chart, last week it formed a Doji candle and to negate the bearish implications, it needs to close above the Doji close of 14,834 tomorrow. It has also broken the upward channel on Monday but moved into the channel with the last two days of positive moves.
The immediate resistance is placed at 14,635 (50EMA) and Monday's high 14,665. Above this zone, the Nifty may fill Monday's gap by moving above 14,785. The 50DMA is also placed at 14,854, which is very near to the multiple resistance area of 14,880. The 100DMA 14,299 and Monday's low 14,248 will act as a strong support zone on the downside. As long as it is protected, the market may consolidate further within the support and resistance zones. The weekly close will give an important signal for near future.
(The author is a financial journalist, technical analyst, family fund manager)
