Avoid aggressive leveraged positions
Nifty formed a long-legged Doji candle on weekly derivatives expiry day; The consolidation may extend to another 2-3 days
Mkt course hinges on Q4 earnings
The frontline indices closed flat to positive on a weekly derivatives expiry day. NSE Nifty gained by just 5.70 points and closed at 17,624.45 points. None of the sectoral indices gained half a per cent. The Nifty Infra index is the top gainer with 0.28 per cent. The Bank Nifty, Auto, FinNifty, and Energy indices closed positively. Nifty Pharma is the top loser with 1.11 per cent. The Nifty Metal, FMCG, Realty, and IT indices closed in the red zone. The advance-decline ratio is at 1.12. About 53 stocks hit a new 52-week high and 70 stocks traded in the upper circuit. HDFC Bank, Axis Bank, and ICICI Bank were the top trading counters today in terms of value.
The Nifty has formed a long-legged Doji candle on a weekly derivatives expiry day. The daily range was a bit increased, but the index is still within Monday's range. It took support for another day on 200DMA. The spurt in volume in the last hour shows full-swing short-covering. It helped bulls to manage to close positively and above 200DMA. It avoided a negative closing too. As mentioned earlier, Monday's low and high is crucial support and resistance.
Unless it breaks on either, the market may move in sideways. The consolidation may extend to another 2-3 days. There is no trend change implications for now. On a weekly chart, the Nifty is about to form a bearish engulfing candle if it closes below 17634 on Friday. If it is a reality, we can assume that the 17863 is an intermediate top. This week's range is already engulfed the previous week's price action. Importantly, today it formed a higher high, higher low candle. With this, Monday's low has become the strongest support for the short term. At the same time, it must close above the previous day's high of 17,685 for a bullish bias. But to resume the uptrend 17,777-17,863 zone of resistance is key. There is no change in the indicators set-up, not showing any directional bias. The RSI is in a neutral zone. As the weekend is in place, and several Nifty companies are announcing Friday and Saturday, it may be risky to hold positions. Avoid taking an aggressive leveraged position now. We may see the range will be violated next week.
(The author is Chief Mentor, Indus School of Technical AnalysisFinancial Journalist, Technical Analyst, Trainer, Family Fund Manager)
