Nifty forms Doji candle

What’s Up

• 1,397 advances and 1,075 declines
• 151 stocks hit a new 52-week high
• 120 stocks traded in the upper circuit
• Hourly MACD histogram suggests that fall is contained for now

The equity indices closed positively after a one-day gap. NSE Nifty gained by 19.95 points or 0.10 per cent and closed at 20,926.35 points. The NIfty Pharma, Auto, Infra, and Realty indices gained by over one per cent. The IT index is the top loser with 1.28 per cent. Bank Nifty and FinNifty closed with minor losses. All other sector indices closed with moderate gains. The India VIX is down by 5.09 per cent to 12.06. The market breadth is positive as 1,397 advances and 1,075 declines. About 151 stocks hit a new 52-week high, and 120 stocks traded in the upper circuit. HDFC Bank, IREDA, PFC, and REC were the top trading counters today in terms of value.

The equities recovered smartly over 152 points from the day’s low. The Nifty has formed a Doji candle, and closed at the day’s high. The Bears failed to close the Nifty below 20,850 points. The volumes were lower than the previous day. The index closed positively, with the recovery in the afternoon session. It took support at 8EMA. With today’s move, the bulls still control the trend. As discussed earlier, the Nifty must close below 20,850 for a reversal.

Otherwise, it mostly consolidates within the tight range. Even the security breach in the Parliament did not affect the market moment. Normally, these kinds of incidents impact the sentiments. On an hourly chart, it is like a V shape, which may not have short-term implications. The Nifty tested the 61.8 per cent retracement level of the last two days of fall in the last three hours. If the Nifty sustains above 20769 for the next two days, it has the potential to reach another all-time high. Importantly, the previous day’s bearish engulfing candlestick pattern failed to get the confirmation for its bearish implications. The hourly MACD histogram suggests that the fall is contained for now. The weekly derivatives expiry session may witness a volatile session. Let us be with a neutral bias as long as the Nifty trades in the 20769-21037 zone. A decisive move out of these levels will result in a trend.

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