Nifty set to inch up with no signs of weakness
The Indian stock market is running like a roaring bull. It closed further higher at a new lifetime high. The BFSI and IT sectors ran the show on Wednesday. The Nifty rose by 1.02 per cent or 136.15 points and closed at 13,529.10. Nifty Bank inched up by 1.48 per cent, and the Financial Services Index closed higher by 1.18 per cent.
The Volatility Index India VIX up by 1.62 per cent. The overall market breadth is positive and in favour of advances. The Open Interest in Nifty and Banknifty up by 5.8 per cent each. This shows that the longs were built up.
The Nifty exactly reached our projected level. It is inching up and no weakness signs. By forming a big bullish candle, it negated previous day's Doji candle's bearish implications. The Nifty closed in positive territory for the 9th consecutive day. Heavyweight stocks led the rally to the new highs. Reliance, HDFC Bank, Kotak Bank, Infy, ITC and HUL were in demand on Tuesday.
As the indicators reached to an extreme overbought condition and the price in uncharted territory, there are no negative divergences visible on the daily timeframe. Currently, the Nifty is trading 25.38 per cent above the 200DMA, which is very rare.
Since 24th September lows, it gained by 25.57 per cent. At the same time, it rose by 80.39 per cent from the March low. As the Nifty met out swing target, now, the next projection level in 127.6 per cent retracement of the fall, which is placed at 13,788. However, a close below the prior bar low is the first sign of weakness in the market.
The market is ignoring several technical and fundamental negatives and moving with liquidity support from the FIIs. Nifty closed above the Bollinger bands, and the bands started expanding.
The expansion of the bands is nothing but trend continuation, and the up-trending 20DMA is confirming that. As we are advocating a cautiously optimistic view, trade with limited position size.
(The author is a financial journalist, technical analyst, trainer, family fund manager)