Nifty will hit record high if it remains above 18,800
The Nifty closed near the day’s high and formed a long lower shadow candle
image for illustrative purpose
The equities bounced sharply from the day’s low with the rally in IT, auto and metal stocks. The Nifty gained by 61.25 points or 0.33 per cent and closed at 18,816.70. In fact, it was up by 179 points from the day’s low.
The Nifty IT, Auto, and Metal indices are up by over 0.70 per cent. Barring Nifty Pharma and Media indices, all other sectoral indices closed positively. The Media index was down by 1.22 per cent, and Pharma closed lower by 0.19 per cent. The India VIX is down by 0.82 per cent. The advance-decline ratio is 1.37.
About 115 stocks hit a new 52-week high, and 74 stocks traded in the upper circuit. HDFC twins, Mazdock Shipbuilders, and ICICI Bank were the top trading counters today in terms of value.
The history of failures repeated again. Bears once again failed to get the confirmation for the previous day’s dark cloud cover. The Banknify took support at 50DMA, bounced and recovered the morning session losses. It formed a lower low.
With a strong pullback after first-hour trading, Nifty closed near the day’s high and formed a long lower shadow candle, which indicates that the fall is utilised for buying opportunity. The Nifty fell below the three-day low today.
After testing the previous flat base breakout level and below 8EMA, it sharply bounced to the recent base breakout. We keep mentioning the importance of 8EMA support; it is once again proven as solid short-term support. Apart from this, the parallel low of Rs.18,660 is a very crucial support for the trend.
If Nifty closes below these 18,660-729 zones of support, there is a chance to go for a short. The index closing above the moving average ribbon is a positive sign. If the rally sustains above 18,800, there is a higher possibility of making a new lifetime in a day or two. In other words, the last two days of price action 18,660-881 is the decision for a trend to continue or reverse.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
