Market rallies for 2nd day in a row
image for illustrative purpose
The stock market rallied for the second consecutive day and reclaimed 14,650 levels. It is discounting all the negative news and moving forward. The Nifty inched up by 168.05 points and closed at 14,653.05. Metals rallied the most by 2.71 per cent, followed by PSU Banks with 2.3 per cent. The Bank nifty is up by 1.43 per cent. The broader indices Nifty Midcap-100 and Smallcap-100 advanced by 1.57 per cent and 1.74 per cent. The Nifty-500 index also up by 1.19 per cent. India VIX cooled off by 1.76. In the derivative segment, the Open Interest is up by 1.09 per cent, and the Put-Call Ratio (PCR) is higher at 1.43. The Nifty finally reclaimed the 20DMA after 7th April and also closed above the 14,600. The Nifty closed above the 38.2 retracement level (14,640) today. The Nifty also moved above the 50EMA. The RSI bounced to above the prior swing high. It has registered a trendline resistance or symmetrical triangle breakout too. As long as the Nifty trades above 14,450, the morning star will get a trend reversal confirmation on the weekly chart. Unlike the previous two days, the buying support continued till the end. It formed the most bullish candle as it closed at a near day's high. This is the highest closing after 9th April. The across board participation in the rally is also positive for the market. If it sustains above the 14,640 levels, the next level of resistance is 14,741, where the 50 retracement placed. On a daily chart, the MACD line is about to move above the signal line to give a buy signal. Even on the hourly chart, the benchmark has not reached an overbought condition, showing the potential to move further upside. The only concern is the deceleration in the volume. The Nifty future volume is much lower in the last six trading sessions. The Open interest up by just a per cent is also not showing any conviction on the rally. The rollovers were seen at 34.70 per cent, lower than the three and six months average.
(The author is financial journalist, technical analyst, family fund manager)
