Nifty forms higher low candle

NSE Nifty ended the four-day losing streak and closed with 48.85 points or 0.26 per cent gain. It reclaimed the 18,600 level and closed at 18,609.35 points. The banks led the market on Thursday, as Bank Nifty advanced by 1.16 per cent. The PSU Bank index is up by 3.81 per cent and the Private Sector Bank index gained by 1.17 per cent. Nifty Pharma, down by 1.10 per cent, is the top loser. All the other sectoral indices closed with marginal gains or losses of less than 0.5 per cent. The market breadth is positive as 1010 advances and 905 declines. About 75 stocks hit a new 52-week high, and 87 stocks traded in the upper circuit. Kotak Bank, Bank of Baroda, and Axis Bank were the top trading counters today in terms of value.

The index traded on a dull note on an event risk and weekly expiry. It traded within the previous day's range and sustained below the 5EMA. Volumes were low, and the trading activity was limited to the stock specific. After the monetary policy, the banks were in the limelight. Because the Nifty traded in the range, there is no major technical development that occurred today. The RSI took support just below the 60 zone and bounced. Yesterday's support of 59.89 will be crucial for Nifty to sustain itself in the green. The index snapped its four-day negative closings. It took support at the 38.2 per cent retracement level of the prior upswing. The daily ranges were shrunk. As the Nifty formed a higher low candle, the previous day's high of 18668 will become a crucial resistance. In any case, the Nifty closes above the 18625-668 zone of resistance; we can assume that the counter-trend consolidation is over.

As we expected last week, the short is negative and retraced to the desired level. Only in case of declining below the 17528-488 zone of support will be negative for the index. The weekly closing is also an import for the future direction. On the weekly chart, it has formed an open high candle and retraced 50 per cent of the prior weekly bar. Let us wait for resistance to be cleared for fresh long positions.

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