Regardless of surge, Nifty rally to be short-lived

No tax direct tax burden. No pandemic cess. These two lifted the sentiment of the market. The finance minister did not touch the direct tax proposals. The measure to liquidity push also welcomed by the market. The market was relieved from the fear of taxing the companies and market participants. In fact, the finance minister delivered 'Feel Good' Budget considering the constraints in the economy. The stock markets witnessed one of the best budget day rallies.

The Nifty advanced by 646.60 points or 4.74 per cent. The Banknifty and FinNifty closed with 8.26 per cent and 7.60 per cent rise respectively. Realty index went up by 6.31 per cent. Only the Pharma index ended up with 0.55 per cent loss. India VIX down by 7.97 per cent. At least half of the Nifty stocks closed with above 5 per cent gains. The Midcap and Smallcap indices gained by 3.3 per cent and 2.01 per cent respectively. The market breadth was extremely positive, with 1,357 advances and 567 declines. The Nifty formed the big bull bar after March 25. Technically, it retraced almost 62 per cent of the previous fall and erased all the losses of the last three days fall.

The Nifty Futures recorded the highest volume since March-April. Today's move surpassed the September 20 Sitharaman candle. On September 20, the Nifty closed with 569 points gain, and today it closed with 647 points gain. The Banknifty also surpassed the September 30 big move.

At least four Nifty stock gained over 10 per cent. Banking and Financial services indices rallied the most by over 8per cent. The benchmark indices sustained the rally after opening with a 100 plus points gap up. Now, let is the time to watch for the sustainability of this upbeat in the near future. After today's sharp rise, the continuation of the rally is necessary to get a directional bias. In the earlier instances when the Nifty rose by over 5 per cent, the rally continued for two-three days.

Let us watch this whether it will go beyond three days this time. Today's high of 14,336 is important for the bulls. Above this level, the rally may continue in the short term. Better to avoid any kind of bearish view for now unless the index closes below 14,050. As long as the Nifty does not close below the previous hourly candle low, be with a positive bias. It is not the time to think about bears.

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