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Fresh bullish signal on Nifty chart

Even though it declined below the 8EMA at the opening, it recovered sharply and erased all the negatives

Fresh bullish signal on Nifty chart

After two days of nervousness, the Nifty rallied again and erased most of the losses. The Nifty gained by 157.95 points or 0.96 per cent and settled at 16641.80. Two days before the monthly expiry, the open interest is up by 6.24 per cent. The Pharma index is the top gainer with 2.33 per cent. The Media and PSU Bank index is also up by over two per cent.

The IT index gained by 1.68 per cent. All the sector indices ended with decent gains. Most of the indices are up by more than half a per cent. The Market breadth is positive, as 1042 advances and 829 declines. About 35 stocks hit a new 52-week high, and 92 stocks traded in the upper circuit. Zomato, Maruti and L&T were the top trading counters on Wednesday in terms of value. The Nifty recovered all of its previous day's losses. In a perfect sector rotation, the Pharma and Banking stocks led the recovery.

It has formed a bullish engulfing candle. It closed above the 200EMA once again. Even though it declined below the 8EMA at the opening, it recovered sharply and erased all the negatives. As all the sectors participated in the rally, it can be a valid recovery. A day before monthly expiry, generally market rallies on a short covering. The Rollovers are below the three and six-month's average. Two days to go for an expiry, the rollovers stood at 51.94 per cent. The Put-Call Ratio (PCR) sharply jumped today to 1.18 from 0.86.

The Nifty has given a fresh bullish signal on the hourly chart. It closed above the moving average ribbon, and the MACD line sustained above the zero line. It has moved above the signal giving a buy signal. The futures volume is higher than in the last three days, which is also a positive sign. As the event risks like the FED meeting and the monthly derivatives expiry, the market may experience increased volatility. For now, Wednesday's low of 16438 and last week's high of 16752 will be a major range and act as support and resistance. For the next two, stay cautious on either side.

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

T Brahmachary
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