Positive sentiment prevailing, bulls are round the corner

THE positive global cues and the cool off currency rallies improved the sentiments in the equity markets. The Nifty up by 232.4 points or 1.6 per cent and settled at 14761.55. Barring the PSU bank index, all the sectoral and thematic indices closed in positive territory. Most of the indices recovered by 1.5 per cent. Public sector stocks outperformed in today's market. India VIX also cooled off by 9 per cent but still above the 25 zone. The overall market breadth is exceptionally positive as 1,285 stocks advanced, and 672 declined. The Nifty opened with a gap up and moved with 150 points during the day. It formed an inside bar. After over 500 points decline, it is natural to consolidate within the range.

The question is, how much time it takes to resume the trend. On an intraday basis, the up and down swings were almost 150 points, and it formed lower highs. The Friday's low and the gap area will act as important support and resistance as it formed an inside bar. Even if it closes above Friday's high of 15015 will give strength to the bulls. Only above Thursday's high of 15,290, will negate all bearish implications. On a 75 minutes chart, the MA ribbon acted as resistance in today's trading. The bearish momentum mostly negligible because of a big gap opening and sustained above the gap area. In fact, on the daily chart, the bearish momentum has increased.

There are no positive divergences visible, even on the lower time frame. The market breadth is positive, and good sector participation in today's market. The global market too traded in positive territory. The currencies failed to continue the last week's momentum. These factors improved market sentiments. Let us wait for today's positive sentiment takes the Nifty above 20 DMA of 14,980. This level will be important for the bulls to resume the uptrend again.

(The author is a financial journalist, technical analyst, trainer, family fund manager)