Decisive move above 19,778 will confirm rally continuation
Nifty formed a higher low and higher high candle, which is a bullish set-up
Whats Up
♦ India VIX fell 1.14% to 11.27 level
♦ 102 stocks hit a new 52-week high
♦133 stocks traded in the upper circuit
♦ Volumes higher than last 2 days, but still below average
The benchmark indices on Tuesday erased the previous day’s losses as the broader market recovered. The Isreal crisis did not show any impact on the domestic markets. NSE Nifty gained by 177.50 points or 0.91 per cent and closed at 19,689.85 points. All the sectoral indices were closed positively. The CPSE index is the top gainer with 2.03 per cent.
The PSE index is also up by 1.81 per cent. Most of the sectoral indices were closed with over one percentage point gain. The India VIX is down by 1.14 per cent and closed at 11.27. About 102 stocks hit a new 52-week high, and 133 stocks traded in the upper circuit. HDFC Bank, GMDC, and Reliance were the top trading counters today in terms of value.
With the renewed buying, the Nifty moved above the previous week’s high. It formed a strong, bullish candle with higher volume support. Volumes were higher than the last two days, but still below the average. It closed above the 50DMA decisively. It also moved above the 38.2 per cent retracement level of 19673, which is the pullback target. If the index sustains above this level, the immediate target is 20 DMA of 19,771 points, and the 50 per cent retracement level of 19,778 is at a similar level.
The RSI moved above the prior swing high, but remained neutral. The MACD is turned upside and showing improvement in momentum. The Nifty formed a higher low and higher high candle, which is a bullish set-up. But only a decisive move above 19,778 level will confirm the continuation of a rally. Now, the Bollinger bands are moving horizontally, and the 20DMA is also flattened, indicating the consolidation will continue.
The intraday swing is the new normal now. The Nifty erased all the losses of previous days. As the index is still below the 20DMA, it is better with the neutral bias. Taking fresh leveraged positions may hurt. Stay in the direction of the trend with strict risk management.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
