Charts Signal More Consolidation

The equity indices traded in a range as the banks and financials declined. The Benchmark index, Nifty, is up 88.55 points or 0.36 per cent and closed at 24,666.90. Nifty India Defence index continues to rally and gained by 3.16 per cent. The Metal index is up by 2.47 per cent. The Realty, Microcap, Energy, Smallcap, IT, Oil and Gas, Media, and PSE indices gained by over one per cent. The Bank Nifty, FinNifty down by 0.25 per cent and 0.23 per cent, respectively. The India VIX is down by 5.36 per cent. The market breadth is positive as 2,183 advances and 694 declines. About 59 stocks hit a new 52-week high, and 196 stocks traded in the upper circuit. HAL, GRSE, Cochin Shipyard, Mazdock, and BSE were the top trading in terms of value.

As we forecast, the benchmark index continues to consolidate within the range. The Nifty traded in Monday’s range and formed a small body candle. The volumes were much lower than the previous session. After a positive first hour, it formed lower highs on the hourly chart. It also declined below the previous day’s low, which indicates the profit booking is continuing. The Bollinger bands further contracted. Expect more consolidation during the week. The non-trending moves may not give opportunities for directional trades. The Index must violate the Monday’ range for a directional bias. The 24,944-974 zone on the upside, and 24,482-378 on the downside will act as a resistance and support zone. Within this zone, avoid directional trades. The weekly RSI is back into the neutral zone. It is important to move into the bullish zone for a long-term bullish bias. The last hour bounce was led by IT and Metals. As weekly expiry on cards, expect a volatile and range-bound trade. The weekly close may give short-term directional clues. Stay neutral to positive for now.

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