Nifty forms rounding bottomcandle

24,850 level will be a crucial support for now, a decisive close below this with an added distribution day, will result in a resumption of a downside move. On the upside, the index must close above 25,038 to continue the bounce. For a decisive uptrend, the index must close above 25,168

The private sector banks and the ITC led the index to recover from the negative opening. NSE Nifty gained by 84.25 points or 0.34 per cent and closed at 24,936.40 points. The FMCG index gained by 2.04 per cent, is the top gainer. The private sector bank index is up by 1.12 per cent. The ICICI Bank, HDFC Bank, and Axis Bank have contributed 66.24 points to the Nifty. Bank Nifty gained by 1.07 per cent. The Consumption and FinNifty are up by 0.91 per cent and 0.82 per cent. On the flip side, the PSE index is down by 1.45 per cent, followed by oil and gas, which is down by 1.37 per cent. The CPSE is also down by 1.25 per cent. The India VIX is down by 6.44 per cent. The market breadth is negative as 1,684 declines and 1,103 declines. About 123 stocks hit a new 52-week high, and 131 stocks traded in the lower circuit. Premier Energies, HDFC Bank, ICICI Bank, and SBI are the top trading counters on Monday in terms of value. After a negative start below 20DMA, the index recovered with the help of private sector banks. The Nifty mostly traded sideways and was volatile. The index gained 0.34 per cent, but with a low volume. The bounce is mostly because of the short covering. On the hourly chart, the index has formed a rounding bottom, which is a positive sign for the short term. As mentioned earlier, the 20 DMA of 24850 will be a crucial support for now. A decisive close below this, with an added distribution day, will result in a resumption of a downside move. On the upside, the index must close above 25038 to continue the bounce. For a decisive uptrend, the index must close above 25,168 level. Short-term bounces with low volume are common during the correction phase. As we expected, the 50 DMA of 24,609, will act as strong support, and the index may consolidate around this level. The MACD histogram shows an increased bearish momentum. The RSI registered a small uptick towards 54.3. It must move above the 60 level for a confirmed upside move. For now, stay cautiously positive as long as it trades above 20DMA. Protecting the profits on the table must be the priority now.

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