Time To Avoid Short Positions

The 50DMA is at 24,644 level, which is strong and the nearest resistance for now. The RSI is above the prior high. A move above 60 will increase the momentum. The MACD histogram shows a strong and increased bullish momentum

The equity indices closed positive after initial setbacks. NSE Nifty was higher by 124.85 points or 0.51 per cent and closed at 24,429 points. The PSE, CPSE, PSU Bank, and FMCG indices closed with less than 0.21 per cent declines. The Consumer Durables index is the top gainer with 2.08 per cent. The Metal, Midcap, Small-cap, Media, and Auto indices are up by over one per cent. All other sectoral indices closed with moderate gains. The India VIX is up by 1.91 per cent to 14.70. The market breadth is positive as 1,804 advances and 1,043 declines. About 114 stocks hit a new 52-week high, and 196 stocks traded in the upper circuit. Adani Green, Dixon, Ola Electric, and Reliance were the top trading counters today, in terms of value.

The Nifty closed above the prior day’s high. The Reliance and HDFC Bank helped to reach near the six-day high. After a tight range trading for a few hours, the index suddenly spurt to near resistance area. With the broader market participation and positive breadth, the index shows signs of recovery. It has formed two successive higher lows and is trading above the 20DMA. The Bollinger bands flattened, showing the end of the decline for now. As stated earlier, if the Nifty is able to close decisively above 24,355, it will result in a tight base breakout. A close above 24,538 will be a high high, and it confirms the reversal on the upside. The 50DMA is at 24644, which is strong and the nearest resistance for now. The RSI is above the prior high. A move above 60 will increase the momentum. The MACD histogram shows a strong and increased bullish momentum. On the downside, the 20DMA, 23985, is the immediate support. Below this level, the 200DMA of 23,664 is the strong support. For now, avoid taking short positions as the heavyweight stocks are bouncing from the bottom. The mid, small, and micro-cap stocks outperforming the large caps. These are the signs of improved strength in the trend in the broader market. Stay positive as long as the Nifty trades above 20DMA.

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