Wait for clear signal
To sustain the momentum, it needs to maintain bullish steam for next 2 days
image for illustrative purpose
Dalal Street discounted many negative news and surged over two per cent. The home currency rupee declined. IT and pharma stocks rallied on bourses. Except for the realty sector index, all the other sectoral indices closed higher.
The Nifty rallied 337.80 points or 2.33 per cent and closed at 14,845.10. The Nifty IT index up by 2.90 per cent. The metal and pharma indices advanced by 2.79 per cent and 2.72 per cent. Fin Nifty up by 2.04 per cent and the Bank Nifty higher by 1.67 per cent.
The India VIX further down by one per cent. The Nifty future's Open Interest (OI) rose by 22 per cent. The PCR is at 1.66 and it shows the market is near the swing high. The market breadth is slightly in favour of advances as 1,015 advances and 900 declines.
The Nifty formed the bullish candle. After opening with a gap up, it sustained gains till the end and tested the March 23 or last week's high. The IT, metals, pharma and FMCG sectors stocks led the market rally.
The rupee decline pushed the IT and pharma stocks. The pharma index closed at two-week high, and the IT index tested the previous week's high. This rally leads to a bullish flag breakout or not, and we need to wait for this weekly closing.
A close above 15,100 will resume the uptrend. The Nifty tested the 20DMA and closed just three points above it. It also closed above the 50DMA decisively. This 50DMA (14,770) will act as immediate support.
The RSI also closed above the prior minor high and above the 50. All the momentum indicators show the bullish strength with today's 2.33 per cent move. To sustain the momentum, it needs to maintain the bullish steam for the next two days. At the same time, it should not breach the prior day's low.
The market breadth is not as bullish as the price. It is just 1:1. As the Put-Call ratio is at the near swing high, do not expect that the market will rally aggressively. Maintain a positive bias as 14,770 as stop loss on an hourly closing basis.
(The author is a financial
Journalist, technical analyst, family fund manager)
