MACD shows increased bullish bias

If the Nifty failed to close above 22,629.5pts, it will be negative andabove this level, the index may test a new high. On the downside, the 22,400 is the key level, after which the immediate support is at 22,323 points or 50DMA. Only below this level market may be nervous and may trade with more volatility 

The equity benchmark indices continue to rally. The Nifty gained by 68.75 points or 0.31 per cent and closed at 22597.80. The Banknifty and FinNifty are down by 0.52 per cent. The Metal and Auto index also declined by 0.62 per cent and 0.12 per cent respectively. All other sector indices were closed with modest gains. The India VIX is down by 1.57 per cent to 21.46. The market breadth is positive as 1319 advances and 1295 declines. About 145 stocks hit a new 52-week high, and 130 stocks traded in the upper circuit. HDFC Bank, HAL, BEL, RVNL, and BHEL were the top trading counters on Wednesday in terms of value.

Barring banking and financial stocks, the equities rallied for the fifth straight day. The Nifty closed above the prior day high and closed near the high of the day. The initial losses were erased in the afternoon session. The volumes were lower than the previous day. Importantly, The RSI is ready to enter the strong bullish zone.

The MACD shows an increased bullish momentum. The indices opened on a weak note, but all the indies were recovered. The heavy-weight stocks Reliance, Infosys, and IT contributed over 56 points in Wednesday’s rally. The Open Interest is also flat. The Nifty closed at the highest level after May 2. On a weekly chart, the index is forming the strongest bullish bar and closed above the two weeks high. On a daily chart, it formed a hanging man candle. The sector rotation is shifted to FMCG and IT sectors on Wednesday. The Nifty closed above the rising channel’s mean level. If the Nifty failed to close above Wednesday’s high of 22,629.5 points, it will be negative for bulls. Above this level, the index tests a new high before the election results. On the downside, the Nifty must protect the 22,400 points. If this is supported, the immediate support is placed at 22,323 points, which is 50DMA. Only below this level market may be nervous and may trade with more volatility.

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