Nifty hovering at 50DMA

The equity benchmark indices continued their rally for the second day and came out of the budget day range. NSE Nifty regained 18,000 level. It closed at 18,015.86 with 86 points or 0.48 per cent gain. Barring Nifty FMCG and Pharma indices, all other sectors participated in the rally today. The FMCG declined by 0.39 per cent, and the Pharma lower by 0.10 per cent. The Nifty Realty and IT indices were the top gainers, with 1.30 per cent and 1.13 per cent, respectively. Other sector indices gained by 0.2 per cent to 0.98 per cent. The broader market breadth slightly improved to 1057 advances and 863 declines. About 149 stocks hit a new 52-week low, and 75 stocks traded in the lower circuit. Reliance, Adani Enterprises and Apollo Hospitals were the top trading counters today in terms of value.

The Nifty has successfully closed above the Budget day high after 13 sessions. It reached the sloping channel resistance line. It closed above the 20DMA for the second successive day. With the two days of positive bias, it was flattened from a downtrend. The strong bullish bar on the second day is has boosted the positive sentiments. Interestingly, the Nifty also closed above the 20-week average, which is positive for the trend. The index opened on a negative note and sharply up in the late afternoon. It reached near the 50DMA (18057). The 18034-57 zone will be crucial resistance for tomorrow. The MACD shows increased bullish momentum, and the RSI is near the bullish zone.

The concerns are broader market participation in the rally is still lower. More stocks are hitting 52-week lows, and more number stocks are trading in the lower circuit. The VIX further declined by 4.4 per cent to below 13 levels is a big worry now. As the weekly expiry is on the cards, wild and erratic price movement can be seen. Lower Nifty Futures volume is another worry. Open Interest is almost flat. The Nifty PCR increased to 1.26, which is a short-term negative. As the Nifty has registered a breakout of a range, be with a positive bias, and keep in mind the 50DMA resistance. Let us hope the market may test 18265 if it sustains above the 50DMA.

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