Pullback May Not Sustain For Long Period

A close above this session’s high or 8EMA of 24,510 with a higher volume will be positive and may test the 20DMA of 24,900. At the same time, session’s low is also very crucial for a positive bias to continue. If the Nifty declines below 24339, it will fall below Friday’s low

The equities bounced from the oversold zone. The benchmark index Nifty gained 158.35 points or 0.65 per cent and closed at 24,339.15 points. Only the CPSE index declined by 0.35 per cent. All other sectoral indices ended in positive territory. The PSU Bank index was the top gainer with 3.78 per cent, followed by Metal with 2.54 per cent. The Media index is up by 1.96 per cent. Realty, Healthcare, Pharma, and Smallcap indices were up by over a per cent. The other sector indices closed with modest gains. The India VIX is down by 2.34 per cent. The market breadth is positive as 1,906 advances and 931 declines. About 129 stocks hit a new 52-week l low, and 152 stocks traded in the upper circuit. Warre Engineers, Indigo, ICICI Bank, and HDFC Bank were the top trading counters in terms of value. Nifty closed positive with short coverage and rollovers as the derivatives expiry neared. The Nifty has formed a higher high and higher low candle. But it failed to close above the prior day’s high. The index faced a resistance at 8EMA. The volumes were lower than the previous day. Interestingly, the index has retraced 50 per cent of the morning session’s upmove in the afternoon. The last hour’s high volume selling indicates profit booking of intraday gains. ICICI Bank, and SBI alone contributed 67 points in Nifty’s gain.

The RSI is still in the bearish zone. As expected earlier, it may try to come into the neutral zone. As the index retraced 50 per cent of the morning session’s gains, we need to watch the follow-up price action. A follow-through day is needed to continue the positive bias. A close above this session’s high or 8EMA of 24,510 with a higher volume will be positive and may test the 20DMA of 24,900 points. At the same time, session’s low is also very crucial for a positive bias to continue. If the Nifty declines below 24,339 points, it will fall below Friday’s low. The pullbacks are common in a downtrend, and they may not sustain for a long period. Try to be neutral in this truncated week. Stay away from the highly leveraged positions.

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