Nifty forms Hanging Man candle

Positive Breadth

• 1,255 advanced and 1,258 declined
• 206 stocks hit a new 52-wk high
• 107 stocks traded in upper circuit
• VIX closed flat at 13.87
• MACD histogram declined
• RSI is in overbought condition

The equity benchmark index tested a new high and closed on a positive note. NSE Nifty gained by 34.45 points or 0.16 per cent and closed at 21,453.10 points. The CPSE and FMCG indices were the top gainers with 1.83 per cent and 1.41 per cent. The Energy and PSU Bank index also gained by 1.58 per cent and 0.79 per cent. Nifty IT, Auto, and Media indices were the top losers.

The India VIX closed flat at 13.87. The Advance and Decline ratio is at 1:1 as the advances were at 1,255 and declined at 1,258. About 206 stocks hit a new 52-week high, and 107 stocks traded in the upper circuit. IRCTC, IRFC, Reliance, and HDFC Bank were the top trading counters today in terms of value. The Nifty has hit another lifetime high after just one pause. After the previous day’s inside bar, on Monday it formed an outside bar on a better day’s range. But the volumes were flat, just above the average.

The Nifty has formed a Hanging Man candle and still shows the tiredness in the trend. After the first hour of sharp decline, the index gradually recovered to an all-time high. The Bollinger bands are still in expansion mode, and there is no sign of consolidation. But the distance from the 20 DMA has reduced to 4.07 per cent from 4.97 per cent in the last two days. It is an indication of probable consolidation that depends on the future price action. The MACD histogram also declined. The RSI is still in extremely overbought condition.

However, it has formed another negative divergence on an hourly candle. With the above evidence, as of date, there are weaker or bearish signals available. The index is only trading in a range for the last two days. As mentioned, a close below the previous day is necessary to get weaker signals, and a close below 21,235 is negative and will give bearish signals. As long as it does not close below these levels, stay with the neutral, positive bias.

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