Nifty turns bullish after 2 consecutive positive gaps

With the de-escalation of the Russia-Ukraine war, the equity markets bounced for the third straight session. The Nifty closed at 17498.25 with a 172.95 points gain. The Bank Nifty, Fin NIfty, Auto, Realty sector indices up by over one per cent. The Media index is the top gainer with 2.28 per cent. The Metal declined by 2.17 per cent, and the Pharma index down by 0.19 per cent. The India VIX is further down by 3.25 per cent. The market breadth is positive as 1381 advances and 755 declines. Adani Power, Apollo Hospital, and Tata Elxsi are the top trading counters. About 56 stocks hit a new 52-week high, and 163 traded in the upper circuit.

.The Nifty finally came out of an 8-day consolidation range. It opened with 100 points positive gap, and sustained the gains. It formed three similar candles, a Bullish Hammer to a Bearish Hanging Man. The Nifty traded in 135 points range and formed parallel highs during the day on a lower timeframe chart. Two consecutive positive gaps show the regained bullish strength. As we forecasted earlier, the market maintained the positive bias to protect the NAVs, as the financial year ended. As the Nifty has broken out of an eight-day base, with renewed buying interest, the breakout target is placed at 17700 levels.

The financial year ending may not be on a negative note. There are no bearish signs, as the index cleared the resistance and traded above the key moving averages. The RSI entered the 60s zone, which is a strong bullish strength. The MACD histogram also shows an improvement in momentum. A 75-minute chart shows a divergence in leading indicators. This may only be a concern if the opens with negative opening sustain the losses. In any case, closes below the 17350, the breakout will fail and enters again into a consolidation zone. As the monthly derivatives expiry is in place, the Nifty will witness increased volatility. Trade cautiously.

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