Nifty continues strong phase, no signs of waning
The equity market moved further and at a new all-time high. IT and Pharma stocks rallied and protected the benchmark from closing lower. The Nifty inched up by 19.85 points, closed at 13,760.55. IT and Pharma indices went up by 1.59 per cent and 1.27 per cent.
The advance-declines ratio is negative as 1,188 stocks closed with losses, and 708 stocks gained. The foreign institutions buying support continued to be positive.
The Nifty formed another doji with a long lower shadow. For the last seven days, these identical candles are not showing their bearish implications at the top.
As they failed to get the confirmation for reversals. General Doji rule is that, at a lifetime high, the next candle must close below the doji for a reversal trade. But, it did not happen for many doji candles since March lows. Even the overbought condition and negative divergence in many indicators are not giving any clues for the reversal.
We keep advocating that the only way is to follow the trend. The intraday trades are not successful in the recent past, the only way to trade this market is to be in position by trialling the stop losses. The Nifty almost met our target of 13,788 and formed two parallel tops almost the same level (13,773). It has broken the previous day's low in the opening session and recovered later, closed at the opening. The late hour buying support is new phenomenon in the market.
On the lower timeframe chart, it took support at 20-period average. Currently, the Nifty PCR is at 1.88, which is the highest level. The theory of PCR says above 1.5 level extremely overbought and shows the swing high. For the past one week, it is quoting above 1.8 level.
Once again the momentum declined as the Nifty formed another indecisive candle. The market is looking strong as it did not form a lower low. As mentioned above, be with the trend as long as it is in motion.
(The writer is a financial journalist, technical analyst, trainer, family fund manager)