MACD flags fresh bullish signal

The heavyweight banks ICICI Bank, HDFC Bank, SBI, and Axis Bank led the market rally on Monday. Together, they contributed over 155 points to Nifty. With these banks rallying to a new high, Bank Nifty made a new lifetime high and beat financial services stocks, which recovered on Monday. The benchmark index, the Nifty, gained 223.45 points or one per cent and closed at 22,643.40 points. the Bank Nifty was the top gainer with 2.54 per cent, followed by FinNifty with 2.14 per cent. The Realty, IT, and Auto indices declined by 0.15 per cent to one per cent. The PSU Bank index was up by 2.56 per cent. All other sectoral indices were advanced by less than a per cent. The Volatility index, the India VIX, sharply up by 11.99 per cent to 12.23, which indicates a probable, impulsive move. The market breadth is slightly positive as 1,389 advances, and 1,233 declines. About 171 stocks hit a new 52-week high, and 149 stocks traded in the upper circuit. ICICI Bank, BSE, HDFC Bank, SBI, and IREDA were the top trading counters on Monday, in terms of value.

The Nifty registered the highest closing after April 10. Monday’s rally is mainly due to the short covering before the monthly expiry. Interestingly, even this one per cent rally did not attract volumes, which gives an element of doubt. Even the market breadth is also not so aggressive, as it was just a little over the 1:1 advance-decline ratio.

The Nifty closed above the prior day’s high, and the MACD has given a fresh bullish signal. The RSI (59.06) is about to move into the strong bullish zone.

For the last six trading sessions, the index has been forming bearish or indecisive candles and trapping the traders on both sides. With the earnings season and the volatility, the index is able to move higher to the critical resistance. In any case, if it sustains above Monday’s high of 22,655 points, it can test the 22,775 points, which is an immediate target. The Bank Nifty already closed at a new high. On the downside, a move below the 22,430 will be negative. If the Nifty closes at 22,430 points, it will form a Doji candle on the month chart. The index rallied by 18.68 per cent since November 2023 by forming a higher high. After this massive rally expect some retracement before the election results.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)