Immediate resistance at 21,500-515 zone
Almost all the F&O stocks witnessed short covering ahead of Jan F&O expiry on Thursday; Volumes were lower than the previous day
Positive Market Breadth
l 1,744 advanced
l 769 declined
l India VIX declined 3.21%
l RSI bounced to above 50
l MACD histogram has flattened
l 102 stocks hit a new
52-wk high
l 116 stocks in upper circuit
The equity benchmark indices recovered from the opening lows. NSE Nifty gained by 215.15 points or 1.01 per cent and closed at 21,453.95 points. The Media and Metal indices were the top gainers with 3.06 per cent and 2.96 per cent. The PSE and CPSE recovered by 3.19 per cent and 2.46 per cent, respectively. All the sectoral indices made gains by over percentage points. The Private Bank index is the only loser on Wednesday by 0.24 per cent. The India VIX has declined by 3.21 per cent. The market breadth turned positive as 1,744 advanced, and 769 declined. About 102 stocks hit a new 52-week high, and 116 stocks traded in the upper circuit. HDFC Bank, ICICI Band, IRFC, and Reliance were the top trading counters on Wednesday, in terms of value.
The short covering led the market to close in positive territory. As the monthly expiry is scheduled for the next day, almost all the F&O stocks witnessed short covering, and many of them recovered from the lows. The most beaten-down stock, HDFC Bank, recovered and contributed about 65 points in Wednesday’s gain. The Nifty opened with a negative gap and recovered 50 per cent of the previous day’s losses. It traded within the first hour’s range most of the time, and the last-hour rush to cover the short positions led to the first range breakout.
The volumes were lower than the previous day. As we expected, the index almost tested the breakdown point of 21,500 points. On an hourly chart, it faced the resistance at moving average ribbon. The index is still 0.92 per cent below the 20DMA. The RSI bounced to above 50. MACD histogram has flattened. The 21,500-515 zone will act as immediate resistance. Above this zone, the index may test the 21,630 points. But if the index closes below 21,370 points, the downside move will resume. Currently, the rollovers were at 53.08, which may increase to 70-75 per cent by expiry. Be on the sideline for now, as the long weekend.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
