Nifty may trade in 19,500-900 range
Closing below 50% retracement level is another negative factor; Currently, Nifty is just 0.73% above 50DMA
What’s Up
• Nifty opened with a huge negative gap
• But it’s able to recover by 170pts from the day’s low
• 119 stocks reached 52-week highs
• 111 stocks traded in the upper circuit
The equities opened with a huge gap down and filled the gap during the day. NSE Nifty closed at 19,751.05 points with a 42.95 points or 0.22 per cent decline. Banks were the worst hit on Friday. The PSU Bank index is the top loser with 1.39 per cent, and Bank Nifty is down by 0.70 per cent. FinNifty also declined by 0.59 per cent. The Nifty Auto index is the top gainer with 0.88 per cent. The remaining sector indices closed with modest gains or losses. About 119 stocks reached their 52-week highs today, and 111 stocks traded in the upper circuit. HDFC Bank, Infy, Tata Motors and ITI were the top trading counters today in terms of value.
The Nifty closed above the previous week’s high, forming an engulfing candle. It opened with a huge negative gap, able to recover by 170 from the day’s low. The profit booking in the last hour of the week, by 60 points with high volume, shows that the traders are not confident of holding their positions on a weekend. It filled the opening gap. The Nifty closed below the 20DMA as the first negative. Importantly, the 20DMA and the upper band are now in a downtrend. Expect more contraction in the price. Closing below the 50 per cent retracement level is another negative factor. Currently, it is just 0.73 per cent above the 50DMA. The Nifty faced resistance at the middle point of the equidistance upward channel. Even though the index recovered from the day’s low, today’s 0.22 per cent decline, with higher volume in the last seven days, meets the distribution day criteria.
A sharp decline in the Bank Nifty from the day’s high is another worry point for the market. The Bank Nifty struggled to close above 50 and 20DMAs and failed. As stated yesterday, the pullback is almost done. A decisive close above 19,883 is positive and will continue the upward move. But a close below 19,635 will be negative and will end the counter-trend. The Nifty may trade in the 19,500-19,900 range in the near term. Either breakout will give a good move in the breakout direction.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
