Tired Nifty showing signs of moving either side

THE benchmark indices closed higher with Reliance Industries' above four per cent surge on Thursday. Mostly subdued trading activity was witnessed after the first hour of trading. The Nifty ended with a 66.80 points gain at 15,173.30. Metal and IT indices and the Nifty Smallcap-100 outperformed the benchmark. The Small-cap-100 was up by 1.81 per cent and Metal index advanced by 1.02 per cent. The Energy index was up by 1.35 per cent as Reliance contributed the most. Banking and financials were the laggards in today's market. The market breadth was positive as 1,123 advances and 780 declines were witnessed. As many as 330 stocks closed unchanged, and 148 stocks hit a new 52-week high.

The Nifty closed above the previous day high and negated the last two days' bearish formation implications. It took support at 5EMA. Mostly traded whole in the first-hour range. After opening lower, recovered very fast and sustained the momentum for the whole day. The Nifty again closed at the resistance line.

As we keep mentioning about the indecisiveness in the market, it is the time to be on the sideline on the benchmark indices. The negative divergences are still present in the lower time frame charts, but the bearish momentum declined because of today's positive closing. On a daily chart, the directional movement indicators were flattened. The negative divergence in +DMI is not a good sign. Though the market moved higher today, the MACD histogram declined. This is another divergence. These divergences are indicating exhaustion in the trend. The only concern is, the market is not getting any confirmation for weakness. Tuesday's high of 15,257 will act as the next level of resistance, and the 5EMA 15,049 will act as support for now. Once these levels are taken out, the Nifty will move either side sharply.

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