No Opportunity For Short Positions In Market

The index must close above Friday’s high on Monday to continue the rally. Then, the positive bias may continue for three to five days. In any case, if the index closes above 25220, we may see extension of rally towards 20DMA. Before that, 25105, will act as strong resistance

The indices recovered from the lows as bank scrips rallied sharply on Friday. The NSE Nifty gained by 104.20 points or 0.42 per cent and closed at 24854.05. The Private Bank Index, up by 1.90 per cent, is the top gainer. The Banknifty and FinNifty are up by 1.57 per cent each. The Media, PSU Bank, and Commodities indices gained by over a per cent. The Nifty IT is the top loser with 1.47 per cent. The FMCG and Consumption indices were down by 0.51 per cent and 0.33 per cent respectively. The India VIX is down by 2.61 per cent to 13.03. The market breadth is slightly negative as 1411 declined and 1349 advanced. About 56 stocks hit a new 52-week high, and 76 stocks traded in the upper circuit. Maxdock, Zomato, Axis Bank, and BSE were the top trading counters in terms of value.

The Nifty recovered 318 points from the day’s low and closed higher. The index has retraced by 50 per cent of the prior session’s candle. The recovery has attracted higher, and above-average volume is a positive sign. The volumes were highest in the last eight days. It indicates that the fall was halted for now. The index also came out of the oversold and bearish zone on a lower time frame. All sectoral indices were negative at the opening, and the market breadth was extremely negative. After the first hour of trading, the index formed a hammer candle and got the confirmation for the day’s

bullish bias.

The index must close above Friday’s high and 8 EMA on Monday to continue the rally. Then, the positive bias may continue for three to five days, which means next week. In fact, the index has made another lower low on Thursday. To form a lower high, the retracement is necessary and quite normal in trend dynamics. If the index closes above 25220, we may see the extension of the rally towards 20 DMA. Before that, the 50DMA of 25105, will act as strong resistance. There is no opportunity for short positions. Stay positive as long as it trades above the 24700. Stay positive for at least next two to three days.

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