Nifty Sees No Change In Directional Bias

The Nifty closed negative for the second consecutive week, closing with a 102-point decline. On Friday, it declined by 82.90 points or 0.33 per cent and closed at 24750.70. The PSU Bank index is the top gainer with 2.88 per cent. The Banknifty, Microcap, FinNifty, and Media indices closed with moderate gains. The Metal index is the top loser with 1.69 per cent. The Defence, IT, PSE, and Commodities indices are down by over a per cent. All other indices declined by less than a per cent. The market breadth is negative as 1581 declines, and 1299 advances. About 64 stocks hit a new 52-week high, and 100 stocks traded in the upper circuit. Eternal, BSE, Suzlon, Nyaka, and Coromandel were the top trading counters, in terms of value.

The Nifty has formed another long-legged, small body candle. The volumes were highest in recent times. Even though the volumes were picked up sharply in the last 30 minutes. With this, the index registered another distribution day. As the index is still above the key moving averages, 20 and 50 DMA, we can not change the market status. The Nifty is trading 3.33 per cent above the 50 DMA. The Bollinger bands are in the uptrend. This is a new scenario, the index may change its direction towards the downside, or erase the distribution with time correction, as well as the price spurts. As the index formed an inside bar, there is no change in the directional bias. The index has largely traded in the range for the last two days. It is better to stay neutral to bullish. As long as the index does not form a lower low, stay on the long side. The Banknifty is poised for a strong breakout. Focus on some of the PSU banks.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)