Nifty on a high, giving confusing signals

An enthusiastic opening at a new high failed to give a confirmed breakout. The Indian stock market is giving confusing signals at lifetime highs. The Nifty closed at 13133.90 with a 20.15 points rise.

BFSI and IT sectors were the laggards in today's market. The PSUs, particularly banks, are outperforming the broader market. PSU Bank index gained by 4.81 per cent. Metal, Auto and Pharma sectoral indices also were in the leading quadrant. The India VIX further declined by 4.56 per cent. The overall market breadth is in favour of advances.

The Nifty opened at a record high and did not sustain at the new top. The hope of closing above the 25th November high (13,145) was not realised. But, it closed above the previous day high and formed a bear candle.

The intraday trading opportunities diminishing every day, as the benchmark index behaving like a hide and seek player. Even the breakout signals are not giving desired results. On a lower time frame chart, the earlier breakout has given a sharp move.

But, today's breakout opening not even sustained for one hour and registered a first failed breakout since September. It traded mostly in sideways after the initial euphoric move, and it showed an indifferent behaviour on weekly expiry day.

The momentum oscillator histogram enters into negative territory now. The technical structure did not change much. The index is moving with stumbled for the past two weeks is indicating something not good in the market. As we are trading above 36 Price-Earnings (PE) ratio, the trend can become fragile anytime. The Nifty has not made any lower low, moving by confusing the short term traders. As mentioned yesterday, a decisive close above 13,145 with a big green bar and a spike in volume confirms the continuation of an uptrend. At the same time, wait for a close below 13,000 levels for a weak sign.

(The author is a Financial Journalist, Technical Analyst, Trainer, Family Fund Manager)