Time for return of bulls as Nifty shows signs of upswing

THE domestic stock market witnessed a volatile day. Finally, the Nifty reclaimed near 15,100 levels. BFSI sectors led the market today. The Nifty gained 142.2 points and closed at 15,098.40. The Banknifty was up by 1.67 per cent, and the FinNifty rose by 2.24 per cent. Pharma and Metal indices were the laggards with 0.87 per cent and 2.51 per cent losses. Auto, Infra, reality and PSU Bank indices ended in a red zone. Though the market closed with big positive gains, the overall market breadth was negative as 1,421 stocks advanced, and 533 declined. India VIX was down by 8.83 per cent.

The Nifty closed above the previous day's high and above the 20DMA. After two days of tight range consolidation, the banks and financials' recovery led the rally. On a highly volatile day, the Nifty slipped 200 points from the day's high and recovered in the late session. As it closed above the 20DMA, with a higher volume indicates that the bulls are back.

The decrease in the distributions day count to three is also a positive sign. As breadth is negative on a positive day is the only concern for now. As the weekly derivative expiry is on the cards on Wednesday, the market may witness further high volatility. The 20DMA 15,018 may act as critical support for now.

Sustaining above this for the next two days is a positive for the market direction. On a 75-minute chart, it formed higher lows and parallel highs, which is the bullish ascending triangle pattern. An hour closing above 15,120 is positive, and it tests the previous high if it sustains above the breakout level. Maintain tight stop losses as the volatility is increasing.

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