Charts indicate indecisiveness
Nifty forms Doji candle; Nifty is just closed above 38.2% retracement level of the prior downtrend; Current price structure is certainly not bearish
The equities rallied for the second successive day and closed higher on Monday as NSE Nifty gained by 93.50 points or 0.48 per cent and closed at 19,528.80 points. Barring FMCG and Consumption indices, all the sectoral indices gained. The rally in Metal, IT, and PSU Bank indices gains added strength to the rally. The Energy, Media, and Realty indices were closed with over one per cent gains. CPSE and PSE indices are up by 2.09 per cent and 1.86 per cent, respectively. The Midcap and Small-cap outperformance continued with 0.98 per cent and 1.33 per cent. The India VIX has declined sharply by 3.54 per cent to 10.96. The broader market breadth is positive. All the Railway stocks were in the limelight. RVNL, IRFC, and Jio Finanacial were the top trading counters today in terms of value. About 257 stocks hit a new lifetime high, and 119 stocks traded in the upper circuit. Today is the day of mid and small-cap stocks.
The Nifty opened with an 89.75 points gap-up and failed to move above the opening level. However, the first-hour decline of over 90 points was recovered to the day’s high. It closed almost as it opened and formed a Dragonfly Doji candle. Even though it closed above the 19,483 points, the Doji candle shows indecisiveness. Importantly, after a 300-point bounce, this kind of price action does not give confidence to go aggressive on the upside. The 20DMA is flattened, and the volume was above the average, which are the positive factors today. The index also closed above the Anchored VWAP resistance. The RSI reached above 55 zone, and the MACD has given a fresh bullish signal. Now, the 50DMA (19445) has become a support. It decisively closed 0.43 per cent above the 50DMA. The Nifty is just closed above the 38.2 per cent retracement level of the prior downtrend. The current price structure is certainly not bearish. At the same time, it is not the time to be aggressive long. Stock-specific activity will continue in the in the near term. Any negative opening or closing is not a good signal for the nifty. As the index formed an indecisive candle, stay positive to a neutral bias.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)