With Nifty looking up, investor can remain bullish

THE stock market further rallied and inching up to the 15,000 levels. With the broader market support and institutional demand, the rally sustained the momentum. The Nifty rose by 10 per cent in the last four days. Today with a positive market breadth it was up by 105.70 points and closed at 14895.65. Barring IT index, all the sectoral indices gained. Nifty IT index was down by 0.43 per cent. The PSU banks rallied the most by 5.88 per cent. FMCG and Media indices were up by over two per cent. Banknifty, FinNifty, Auto and Energy indices advanced by around one per cent. The volatility index India VIX is cooled off by 2.62 per cent and closed at 24.12. Market breadth is positive as 1195 advances and 690 declines. As many as 335 stocks closed unchanged. A total of 144 stocks hit new 52 weeks high.

The Nifty rallied another 100 points and sustained above the breakout level for the second day. It negated the suspected bearish implications of the previous day's hanging man candle. It honoured the resistance line of broadening formation on a lower time frame chart and finally closed below it.

Now, it looks like more of inverted head and shoulders. A close above today's high will be another breakout. The Nifty is moving higher towards 15,000 mark, which we projected yesterday. The short squeeze pushed the market higher on lower volume again.

Apart from the lower volume, the daily range also shrank further. The MACD has given a fresh buy signal as the histogram enters into the positive zone. The RSI was flat at 65 zone. Watch the RSI at 70 zone; in case it moves above that mark, it will be another positive factor added to the Nifty. The trend strength indicator ADX has not advanced much in the last four days even though the Nifty rose by almost 10 per cent.

In fact, it is declining. This shows the price internals are very strong as it looks. Any reversal could be lethal. Now, the breakout level 14,754 to 14,714 is a critical support zone. On the upside, as mentioned earlier, above 14,915 it can test 15,050 level. There is no reason to be bearish or to take a short position. Be with a positive as long as it closes higher.

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