Close above 17,759 will be positive for market

The domestic markets sharply bounced and erased 50 per cent of the recent losses. The NSE Nifty gained by 159.20 points and settled at 17,691.25 points. All the sectoral indices closed in with decent gains. The broader indices Nifty Midcap-100 and Smallcap-100 indices closed with 1.57 per cent gains each. The Metal index is the top gainer with 2.99 per cent. The Media, Realty and the PSU Bank indices advanced over two per cent. The Pharma and Energy indices are up by 1.54 per cent and 1.45 per cent. The India VIX was down by 2.76 per cent and closed at 16.73 level. The overall market breadth is positive as 1,484 advances and 513 declines. About 136 stocks hit new 52-week high, and 240 stocks traded in the upper circuit on Monday.

The NSE Nifty opened above the Doji candle high and given a reversal signal. It faced resistance at the channel demand line. It closed decisively above the 20DMA. As we expected yesterday, the Nifty almost tested our short-term target. The reversal needs to move above 17,793 and sustains for at least two days, which means Friday's low is nothing, but a short-term minor bottom. There is a trend reversal signal, as the Nifty did not form a lower low or a lower high. The broader market participation is showing the inherent strength in the market. The laggard sectors Pharma and Metals are in the limelight today. The Midcap and Smallcap indices outperformed the benchmark indices.

On a 25 minutes chart, the NSE Nifty has made a lower high as the profit booking witnessed higher levels. For Tuesday, the 17580-630 zone will act as a crucial support for the index.

Only a sustained move below this zone will test Friday's low. The Nifty retraced 50 per cent of the six days of fall in just one day shows the strength in the market. A close above 17,759 will be positive for the market and continue the uptrend to make another new high.

(The author is financial journalist, technical analyst, family fund manager)