Wait for consolidation to end and to take directional bias
Nifty forms an indecisive bar, sans any trend change implications; A close or decisive move above 50EMA, placed at 17,256 (which is the same level previous day's high) will resume positive bias in direction
image for illustrative purpose
Indian equities recovered from the opening lows and closed at the day's high. The NSE Nifty gained by 140.05 points or 0.82 per cent and closed at 17123.60. The Nifty CPSE and Realty indices were the top gainers with 1.75 per cent and 1.62 per cent, respectively. The FMCG, Bank Nifty, Infra and PSE indices advanced by over one per cent.
Only the Media index is down by just 0.07 per cent. All other remaining sectoral indices closed higher. The market breadth is negative as 1013 declines and 888 advances. About 34 stocks hit a new 52-week low, and 58 stocks traded in the lower circuit. Axis Bank, ICICI Bank and Adani Enterprises were the top trading counters on Wednesday in value terms. Most of the Adani group stocks closed lower.
The short-covering and positive global futures fuelled the markets to recover the previous day's losses. The Nifty closed almost at the day's high. All the sector indices reversed the losses and closed in positive territory. The Nifty is back again above 200DMA. It formed an indecisive bar, which does not have any trend change implications. Currently, the index is trading 1.16 per cent below the 20DMA and 2.14 per cent below the 50DMA. The 50EMA is placed at 17,256, which is the same level previous day's high. A close or decisive move above this level will resume the positive bias in the direction.
The MACD line is flattened, and the momentum is also flat. The index is undergoing consolidation between 200DMA and 20DMA. Either breakout is needed for a decisive directional move. The consolidation may continue for another two days. Even though there is a weekly expiry, the Nifty does not violate the consolidation zone. As the broader market breadth is negative on a gaining day is not a promising sign. Let us wait for consolidation to end to take the directional bias. On a weekly closing basis, the index has to move beyond the previous week's levels.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
