22,021-22,187 zone crucial for near term
Stay focused on stock-specific activity, and be with mid- and large-caps; An indecisive candle at the lifetime high needs confirmation for bearish implications
NSE Nifty hit a new lifetime high of 22,186.65pts with a contribution from heavy-weight stocks like Reliance, ICICI Bank, and ITC. The Nifty gained by 81.55 points or 0.37 per cent and settled at 22,122.25 points. The Pharma and FMCG indices were the top gainers, with 0.88 per cent, and 0.79 per cent, respectively. The Realty index is the top loser with 0.67 per cent. The Nifty IT and PSU Bank indices were down by 0.30 per cent, and 0.47 per cent. All other indices gained by less than 0.50 per cent. The market breadth is positive as 1,570 advances, and 1,026 declines. About 211 stocks hit a new lifetime high, and 192 stocks traded in the upper circuit. HDFC Bank, NHPC, IRFC, and RVNL were the top trading counters on Monday in terms of value.
The equity benchmark indices were at their new high. A new lifetime with almost half the previous day’s volume is abnormal. It closed just below the previous high and formed a long-legged, small-body candle. It looks like an Evening Star. If the Nifty opens with a negative gap and closes negative, it will give a reversal. A sharp decline in a few large caps like L&T, Coal India, TCS, and Infosys erased the majority of the gains.
The MACD is about to give a bearish signal on an hourly chart. As the index closed below the breakout level, waiting for a decisive close above 22,127 is better. Even the Bank Nifty also formed a similar candle, with a close below open and low volume after January 20. Interestingly, none of the sectoral or thematic indices were gained or lost over a percentage point. The only volatility index, India VIX, is up by 5.22 per cent. An indecisive candle at the lifetime high needs confirmation for bearish implications. Other than indecisiveness, there is no weakness visible in the index. Monday’s range of 22,021-22,187 zone is crucial for the near term. If the Nifty closes below 22,022, it will give a reversal signal. Stay focused on stock-specific activity, and be with mid- and large-cap stocks.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
