Broader 21,137-22,126 range may continue

The equities bounced from the opening lows. Weak global markets did not influence the sentiments. The Nifty closed at 21,840.05 points, a net gain of 96.80 points or 0.45 per cent. Only the defensive sectors, Nifty IT and Pharma, were negative, with 1.12 per cent and 0.90 per cent, respectively. The PSE and CPSE indices were the top gainers, with 3.34 per cent and 2.76 per cent, respectively. The Nifty Media and Energy indices gained by 2.51 and 2.24 per cent, respectively. All other sectoral indices were up by 0.75 per cent to 1.77 per cent. The India VIX is down 2.36 per cent to 15.44. The Market breadth is positive as 1,638 advances and 881 declines. About 74 stocks hit a new 52-week high and 110 stocks traded in the upper circuit. HDFC Bank, SBI, IRFC, and NHPC were the top trading counters on Wednesday, in terms of value.

The Nifty has tested the 50DMA and engulfed the previous three days of price action. It closed at the current week’s high. The daily trading range was increased to 340 points. After opening with a negative bias the global market was weak. Wednesday’s unexpected bounce, with a lower than the previous day’s volume, has an element of doubt. A sharp bounce in PSUs and Banks was the driving force on Wednesday. After testing the 50DMA, it bounced 1.5 per cent and traded 0.90 per cent above the 20DMA. With this, the mean reversion is almost completed. Now, the 21,523-675 zone will act as a support zone for the short term. The Bollinger bands began to contract. The index went back into the rising channel after an initial breakdown. If the last 15 days of Tom-Jerry kind of price action, expect a negative close on Thursday, with a high probability of forming an inside bar. The RSI is in the neutral zone, and there is no positive divergence is visible. The MACD line is below the signal line, but the bearish momentum has declined. The broader range of 21,137-22,126 will continue for a few more days. The weekly derivatives expiry may increase the volatility. The first hourly high is crucial to continue the rally.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)