Consolidation may continue till F&O expiry

Dalal Street closed positive for the second day. NSE Nifty on Tuesday closed at 19,342.65, with 36.60 points or 0.19 per cent gain. A majority of sectors closed positive. The PSU Bank, FMCG, and Pharma indices closed with less than a half per cent decline. The Nifty Realty and Metal indices were the top gainers with 1.69 per cent and 28 per cent, respectively.

All other indices were closed with 0.1 to 0.9 per cent gains. Bank Nifty closed at exactly at the previous closing level. The market breadth is positive. The VIX is down by 1.39 per cent to 12.22. About 117 stocks hit a new 52-week high, and 101 stocks traded in the upper circuit. HDFC Bank, Reliance and Jio Financial are the top trading counters in terms of value.

Equity benchmark indices were confused about the directional move just before the monthly expiry. The Nifty opened higher and closed lower. The volumes were higher than the previous day and above the average. These higher volumes on a bearish bar are a worry for now. There was a distribution in some of the index heavyweights. The index is still below the 50DMA and 20DMA. The MACD signal line also declined below the zero line today. As the index closed below the open, it formed a bearish candle, and the open is almost the day’s high. The RSI is around 45. It faced resistance at 8EMA for the second day. The index had formed higher low and higher high candles for the last two days. The 50DMA resistance is now at 19,398 points. Currently, the rollovers are at 39.52 per cent. We may see further improvement in the next two days. Though the index closed above the sloping channel, we need confirmation of the bullish bias. As the Bollinger bands are in a downtrend, it need a close above the 20DMA of 19452 for an upside confirmation. As stated earlier, we may see a 19,000-19,500 range breakout in the next two days. The consolidation will continue till the expiry is over. Stay cautious on this defined range. Any negative close is not good for the market at this juncture.