Nifty on upswing; counter-trend consolidation likely

THE equity market closed at another historical high with positive economic data. The market capitalisation crossed Rs 250 lakh crore for the first time in Indian stock market history during the week. The Nifty closed at the highest point of the week. It is up by 89.45 points or 0.52 per cent and settled at 17,323.60. Reliance has broken out of one-year consolidation with huge move, and contributed most of the index gains. The Banknifty, FinNifty and FMCG indices closed with less than a quarter per cent loss. Auto, Metal, Realty, Media, and Infra indices were up over one per cent. The overall market breadth was positive as 1,016 advances and 902 declines were recorded. About 119 stocks closed at 52-week high, and 133 stocks traded in the upper circuit.

The Nifty gained by 618 points during the last week. Every day it hit a new lifetime high. Just one day, it closed mildly negative; it registered over 200 point rally two consecutive sessions at the beginning of the week. As mentioned in earlier columns, there is weak sign in the market. It met the 100 per cent of measure target of the last two months' consolidation. It rose by 1,810 points or 11.67 from the 28th July low in just 26 sessions. Before the June-July consolidation, the Nifty has rallied 12.37 per cent in 37 sessions. During the 200 points consolidation, we hinted that a breakout of the range would be sharper. It exactly met the 100 per cent target of the consolidation.

Now the question is how long the rally can sustain. The classical technical analysis defined that any sharp upside will enter into counter-trend consolidations in the form of flat bases, flags and pennants. Even in the last month's rally, there are two small consolidation bases. These bases are important to get clues about trend continuation or a reversal. The counter-trend consolidation may appear above the 16,700-900 zone. As long as this zone sustains, remain with a positive bias.

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