Stay sideways on the weekend

The equity market continued its rally and reclaimed 17,000 level. The NSE Nifty closed at 17072.60 with 117.15 points or 0.69 per cent gain. The Realty index is the top gainer, with 2.31 per cent. The Nifty Smallcap-100 and FMCG indices closed with 1.27 per cent and 1.34 per cent, respectively. The IT and Energy indices also registered above one per cent gain. The Media index declined by 1.1 per cent. The India VIX is further down by 4.55 per cent. The market breadth is positive as 1311 advances and 716 declines. About 91 stocks hit 52 weeks high and 175 stocks traded in the upper circuit.

The Nifty closed higher for the third successive day as the short covering continued and the absence of fresh negative news. Most of the global markets are in the holiday mood, which helped the domestic market with a positive bias. On a weekly expiry day, the Nifty traded in sideways and was not given any directional trade. It formed another Doji candle just above the 50 per cent retracement level. It is evident that, after three consecutive days of positive closings and over four per cent gain from the low, the momentum is waning.

The price pattern looks like a rising wedge on a lower time frame, which is bearish. At the same time, the hour's Doji candle also gives some caution signal on the trend's strength. There is a negative divergence developed in the very short-term, 15-minute chart. The Nifty future volume is still below the average. A rally on low volume cannot be trustworthy. At the same time, the Nifty futures has formed a bearish Shooting Star candle. Closing below the opening level and the long upper shadows are clear signals for the exhaustion of pullback. The 20DMA is placed at 17149, and the 61.8 per cent retracement level is at 17170. These levels will act as critical resistance for the index on the weekend. It is better to keep in sideways on the weekend.

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