MACD indicates fresh bullish signal

The global market’s weakness and Fed Chairman’s comments have shown any impact on the domestic market. NSE Nifty recovered from the day's low, and closed with 42.95 points or 0.24 per cent, and settled at 17754.40. The Bank Nifty, Auto, Energy and Infra indices were the top gainers with 0.55 to 0.83 per cent gains. The Realty index, down by 0.68 per cent, is the top loser. The Nifty pharma, and IT indices are down by 0.49 per cent and 0.38 per cent, respectively. The market breadth is positive as 1049 advances and 863 declines. About 59 stocks hit a new 52-week low, and 78 stocks traded in the upper circuit. Adani Enterprises, Reliance, and HDFC Bank were the top trading counter today in terms of value.

The Nifty smartly recovered 155 points from the day's low and negated the previous day's shooting star's bearish implications. It closed above the 20DMA and at the day's high. The recovery is mainly because of the banks rally. The Nifty also formed an Engulfing candle. The global market's weakness did not show an impact on domestic equities. After opening with a gap down, and took support at 200EMA. The Nifty sharply recovered in the afternoon session. The move between 3-3.15 pm is very sharp, as it gained by over 50 points in just 15 minutes. On a positive day, the Open Interest is also up by 8.05 per cent, indicating that fresh longs were created in the system. On this positive day, the VIX is up by just 1.49 per cent.

For the second successive day, Nifty has almost tested the gap area. The RSI moved above 52, and the MACD line moved above the signal line and gave a fresh bullish signal. Now, the question is, will this bounce will go beyond 17800, which is a 61.8 per cent retracement level? Above this, the 50DMA resistance is at 17850. As the weekly derivatives expiry is in place, the short-squeeze will continue with higher volatility.

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