8EMA at 24,316 is the crucial support, only a close below this level will give weak signals; Next one month, the earnings and the Budget will influence the market direction

Negative Market Breadth :

• 1,577 declines
• 1,108 advances
• RSI back to above 72
• 101 stocks in upper circuit
• India VIX is down by 1.93%
• 164 stocks hit a new 52-wk high
• Bollinger bands are in an uptrend

With the earnings season kicking off on a positive note, the benchmark indices closed at a new high. NSE Nifty gained by 186.20 points, or 0.77 per cent, to 24,502.15 points. The IT index, up by 4.53 per cent, led the rally. The Services index gained by 1.08 per cent. The Realty index is the top loser at 1.50 per cent. All other indices gained or declined by about 0.50 per cent. The India VIX is down by 1.93 per cent to 13.72. The market breadth is negative as 1,577 declines, and 1,108 advances. About 164 stocks hit a new 52-week high, and 101 stocks traded in the upper circuit. IREDA, IRFS, TCS, HDFC Bank, and RailTel are in the top trading counters on Friday in terms of value.

Nifty closed above the prior week’s high and registered a new lifetime close. Our target of 24,600 is almost met. The Nifty came out of the last six days of consolidation with higher volumes. Even the weekly volumes are also higher than the last week. TCS and Infosys have contributed about 100 points in the rally. With Friday’s breakout, there are no weaker signs in the index. The 8EMA is the crucial support for the last few weeks, currently at 24,316 points. Only a close below this level will the index give weak signals. The Bollinger bands are in an uptrend and indicate further upside towards 24,700 points. Further continuation of the rally will depend on the earnings, particularly index heavyweights results. Next one month, the earnings and the Budget will influence the marketdirection. After the brief resting period, the RSI went back to above 72. The MACD line is on the signal line and far from the zero line. These are indications of an overstretched market. The indicators can be in the overbought condition for some period unless there is a strong sell-off. Ride the trend as long as there are now reversal signals. Stock-specific activity will continue. Watch the money flow, as the sector rotation is key.

(The author is a Sebi-registered Research Analyst, Chief Mentor, Indus School of Technical Analysis and Financial Journalist)