Nifty forms bearish candle
It made lower highs and lower lows and formed a bearish candle and also closed almost at day's low on Thursday
The equities witnessed the profit booking near the key resistance. NSE Nifty did not sustain at the opening level. It gained by 57.50 points or 0.33 per cent and closed at 17331.80. In fact, it was down by over 100 points from the day's high. The Nifty Pharma and FMCG indices close lower by 0.34 per cent and 0.43 per cent, respectively.
The Nifty Metal index is the top gainer with 3.25 per cent. The Realty and IT indices are up by 2.08 per cent and 1.57 per cent, respectively. All other sector indices closed with decent gains. The market breadth is positive as 1387 advances and 516 declines. About 68 stocks hit a new 52-week high, and 116 stocks traded in the upper circuit. Reliance, ZEEL, and Bajaj Finance were the top trading counters on Thursday in terms of value.
After the September month's derivatives expiry, the Nifty has registered two very bullish days. It filled the 26th September gap area. In the last four trading sessions, it gained by over three per cent. It tested the near 20 and 50DMA resistance. The Nifty also tested the 50 per cent retracement level of the prior upside move. It opened with a big positive gap, but did not sustain above the first hour high.
It made lower highs and lower lows and formed a bearish candle. It closed almost at the day's low. In any case, a gap down and negative closing on Friday will confirm the reversal. As mentioned earlier, the 17400-500 zone is crucial for the bulls to sustain the moment. At the same time, the 50DMA and 200DMA are acting as resistance and support for now.
A decisive close on either side will give a strong directional move, as the momentum is waning. MACD histogram has reached to near zero line on an hourly chart. For now, it is better to take out some profit from the last three days of the big rally. Even in the global markets also, after a big rally, the momentum is declining. As the earning season is beginning on Monday, focus on earnings-accelerating companies and high relative strength stocks.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
