Upward momentum slows down
Nifty continues positive trend, traded in just a 175-pt range for last 4 days; The volumes declined to below-average and lowest levels in the last 10 days
image for illustrative purpose
Positive Mkt breadth
- 1,529 advances and 1,042 declines
- 189 stocks hit a new 52-wk high
- 147 traded in the upper circuit
- No weakness signal on daily chart
The equities traded sideways and in a narrow range. The Nifty closed at 20997.10 with 27.70 points or 0.13 per cent gain. The PSU Bank and Metal indices were the top gainers with 1.36 per cent and 1.04 per cent. The FMCG, Realty, Infra, Midcap, and Small-cap indices gained by over half a per cent. The Nifty Pharma is the only loser today. The market breadth is positive as 1,529 advances and 1,042 declines. About 189 stocks hit a new 52-week high, and 147 stocks traded in the upper circuit. IRFC, HDFC Bank, IREDA, and Adani Enterprises were the top trading counters today in terms of value.
The Nifty has not moved anywhere except to form another high, technically. It moved in a 102-point range and closed just below the psychological level of 21,000 points. The index has traded in just a 175-point range for the last four days. The volumes declined to below-average and lowest levels in the last ten days. The RSI (83.17) flattened further in the extreme zone. The weekly RSI is flattened today in the overbought zone. The MACD histogram shows a decline in strong bullish momentum. The RSI and the MACD have formed a negative divergence on an hourly chart. Bollinger bands are still in expansion mode. The index has not given any weakness signal on a daily chart. But the momentum has been lost. The hourly and two-hour charts show a clear divergence. The Bollinger bands also show a squeeze, and the 20-period average is acting as a crucial support.
The 175-point range is crucial for now, and either side breakout will give a clear directional bias. The broader market breadth is positive. As the Nifty entered into the leading quadrant, there were no imminent dangers to the ongoing trend. Last Thursday’s low is the immediate support, and only below this level may the index witness selling pressure. On the upside, the index is in uncharted territory. Once the 21,000 level is decisively violated, the target is open to 21,145 points. From here onwards, the momentum and the relative performance are key. If it closes below the 20,958 points, it will get the initial signs of weakness. Until then, it stays with neutral to positive bias.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
