Strong support at 17,582pts
The important thing to understand here is that, the whole upswing is with below-average volume in the cash and derivative segment. This low volume rally cannot be trustworthy in many ways. Let us wait to watch for price action and it’s behavioral pattern
image for illustrative purpose
The Dalal Street extended the gains fourth successive day as NSE Nifty has gained by 120 points or 0.67 per cent and settled at 17925. The Bank Nifty led the rally with a 2.32 per cent gain. The index was the top loser with 1.93 per cent. Pharma and Media indices are down by less than half a per cent. The Auto, Metal, Realty indices up by over one per cent. The Small and Midcap indices are underperformed today. The volatility index India VIX is up by 6.87 per cent. The market breadth is neutral as 1095 advances and 1045 declines. About 166 stocks traded in the upper circuit.
The market continued its impulsive move, and the benchmark index closed with another over a hundred points gain. The Nifty has recovered 1534 points or 9.35 per cent in 12 sessions from the 20th December low. The downtrend from the 19th October high took 42 trading sessions, which corrected 2192 points of 11.78 per cent. There are two lower highs and two lower low swings between this fall and rise. Each of the upswings did not cross the 50 per cent retracement of the earlier swing. The downswing between 15-29th November is the sharpest of 1427 points in just 9 sessions.
The current upswing is a mirror image on the upside, with 1534 point rise in 12 sessions. And the current upswing is also the longest on time-wise. Like earlier sharp fall, followed by a counter retracement, this upside retracement also will enter into a counter consolidation, at some point in time. A decline below the prior bar low will give the first sign of weakness in the trend. The immediate and strong support is at 17582. As it is already above the 61.8 per cent retracement of the downtrend, the 78.2 retracement level is at 18133, which may be the near term target. The important thing to understand here is that, the whole upswing is with below-average volume in the cash and derivatives segment. This low volume rally cannot be trustworthy in many ways. Let us wait to watch for price action and it's behavioral pattern.
(The author is financial journalist, technical analyst, family fund manager)
