Nifty forms strong bullish bar

A decline for 2 consecutive days will create a death cross. For now, hope for the behaviour around 18150 and there is no scope for the short positions

Merger news of HDFC twins, easing of the Russia-Ukraine crisis, and renewed buying interest from the FIIs pushed the market higher. NSE Nifty crossed the 18,000 level after the 19th of January. The Benchmark index is up by 382.95 points or 2.17 per cent. Because of the heavy weightage, the Fin Nifty was up by 4.64 per cent, and the Bank Nifty rose by 4 per cent. All the sectoral indices closed in green. IT and PSU bank indices were underperformers with less than one per cent. The VIX was down by 2.86 per cent and settled at 17.90. The market breadth is positive as 1662 advances and 442 declines. HDFC, HDFC bank and Adani power were the top trading counters. About 81 stocks hit a new 52-week high, and 308 stocks traded in the upper circuit.

HDFC twins merger news rocked the market today. Two heavyweight stocks were up by over ten per cent each. With this, Fin Nifty and Bank Nifty advanced by over four per cent. As we mentioned yesterday, the Nifty has reached to 18100 levels. With today's move, the Nifty is very near to the channel line or sloping line resistance, which is placed around 18150. A decisive close above this level will lead to a move above the prior swing of 18350. It is important to maintain today's gains with follow-through days. There are currently no distribution days and trading above the 50DMA, so it is clearly in a confirmed uptrend. The Nifty has formed a similar strong bullish bar with a gap-up opening. In fact, today's candle has confirmed the prior day's Bullish Engulfing pattern. With this sharpest move of over 1100 points in just six days, and as it reached near resistance, it is better to be cautiously optimistic. The RSI is almost near the prior high. The distance between 50 and 200DMA was reduced further. A decline for two consecutive days will create a death cross. That is danger before us now. Otherwise, as long as it trades positive, be with the trend. On the other side, the volumes are below average for the last 11 sessions in the future. In fact, the Open Interest declined on an over two per cent up, which is not convincing. Let us hope for the behaviour around 18150. For now, there is no scope for the short positions.

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