Nifty forms higher high, higher low

The equity market bounced and reclaimed 18000 levels. The benchmark index, Nifty, gained by 190.60 points or 1.07 per cent and closed at 18003.30. All sectors participated in the rally. PSU Banks index is the top gainer with 3.23 per cent. The Nifty Media index is up by 2.25 per cent. The Realty, Auto, Bank nifty, Fin nifty indices advanced by over 1.5 per cent. The Pharma index closed flat. The India VIX is up by 0.43 per cent. The market breadth is positive as 1475 advances and 620 declines. About 217 stocks hit a new 52 week high and 301 stocks traded in the upper circuit.

The Nifty closed above the last week's high after two days of consolidation. It formed higher high, higher low bars for the day on a lower timeframe and sustained the bullish momentum. It reclaimed above 18000 levels after testing several times during the day. Within the upward channel on a 75-minute chart, the index has broken out of another flat base today. As we mentioned earlier, the target is intact at 18211. After opening with a gap up, the Nifty has moved slowly and steadily and maintained the momentum on the upside. All the sectors and broader market participation indicate the inherent strength in the up move.

Now the support levels have increased to 17816. Only a close below the 17638, which is a 23.6 per cent retracement level, the market will give us weaker signals now. The positive directional movement indicator +DMI also moved higher than the previous high, is a positive factor. With over one per cent move today, the index entered into a confirmed uptrend. The only concern is volume. The 1607 points rally from 16410 is not supported by volume. As the price is in a clear uptrend, continue the bullish view as long as the prior bar low is protected.

(The author is financial journalist, technical analyst, family fund manager)