Markets likely to be volatile
The day's move happened in the first hour itself. The intraday did not get an opportunity to trade. These shorter-term movements are puzzling the traders, made them keep guessing the move
image for illustrative purpose
The markets opened higher and traded in a range. The Nifty closed near a lifetime high. The Nifty closed at 15301.45 with 93 points gain. The IT index up by 1.76 drove the market to the new highs. The Realty index up by 2.84 per cent. The other sectoral indices, Nifty Auto, FMCG, Pharma and Fin nifty and Bank nifty closed with 0.1 to 0.5 per cent gains. The Metal index fell by 1.86 per cent and the Energy down by 1.13 per cent. Of the 2,259 stocks traded, 1,223 advanced, 711 declined, and the rest remained unchanged
The Nifty registered second highest closing high after 15th February. The IT stocks empowered the benchmark index with a 1.76 per cent rally. The benchmark index is getting ready for another big breakout. The Nifty unveiled another new 66-day cup pattern, with a depth of 7.6 per cent. For the last 66 days, the Nifty has given many confusing signals, including on Wednesday. Though it is near the breakout level and almost near lifetime high close, it formed a hanging man candle. The volumes are relatively low. Generally, the hanging man at a high is bearish if the next candle closes below to it. The last four bars on 75 minutes chart, was very much in a range.
The day's move happened in the first hour itself. The intraday did not get an opportunity to trade. These shorter-term movements are puzzling the traders, made them keep guessing the move. As the next day is the monthly expiry, volatility will play a key role. The adage "Sell in May and go away" has no relevance now, as this May erased all the losses of the last two months with 6.26 per cent gain as of now. All the moving averages are trending upside, as the Nifty is at a nearly new high.
The Nifty is trading 3 per cent and 3.8 per cent above its 21- and 50-DMA, respectively. The RSI is the highest level after 18th February. The ADX (12.96) is still not convincing, as it is well below the 16th February level. As mentioned above, the low conviction on the positive moves stunning the traders. As of now, NO shorts in the market unless the Nifty closes below the prior bar low. Keep trailing, stop loss and continue the positive bias.
(The author is financial journalist, technical analyst , family fund manager)
