Nifty signals positive bias in broader mkt
Forms an indecisive Dragon Fly doji candle; Rally will continue if the index closes above 22,394
The market breadth is extremely positive as 1875 stocks have advanced and 761 declined. The 5.63% fall in VIX is a worry for now. The market can move on either side as the event risks are very high
Equities rallied for the second successive day and closed higher. Nifty gained 189.40 points or 0.86 per cent and closed at 22,336.40. The PSU Bank index, which was up by 3.07 per cent, was the top gainer on Monday. All the sectoral indices ended in positive territory. Nifty Consumer, Pharma, and Infra indices gained by more than one per cent. All other sectoral indices advanced by 0.21 per cent to 0.97 per cent. The India VIX is down by 5.63 per cent to 12.70. The market breadth is extremely positive as 1875 stocks have advanced and 761 declined. As many as 151 stocks hit a new 52-week high, and 209 stocks traded in the upper circuit. HDFC Bank, IDEA, and JioFin were the top trading counters on Monday in terms of value.
The Nifty closed above the 20 and 50DMAs, reflecting the positive bias in the broader market. However, volumes were much lower than in the previous five days. It traded mostly below the opening level, but in the last hour’s rush to cover or rollover the positions, it bounced sharply above the opening. It bounced over 177 points from the day’s low and erased all the first hour’s losses. But there is no change in the trend pattern. The index may consolidate within the last six days of the 998-point range. With this recovery, the index has formed an indecisive Dragon Fly doji candle. If Nifty closes above 22,394, which is the 61.8 per cent retracement level of the prior fall, it will continue the recovery. The 22,394 is the immediate resistance. Above this, the gap area of 22427-503 will act as strong resistance. The RSI (52.32) is in the neutral zone. The MACD histogram shows a decline in the bearish momentum.
Elder’s impulse system has formed a bullish bar. Stochastic RSI has given a fresh, bullish signal.
After a 598 points bounce from Friday’s low, it may attract profit booking. As the derivative monthly series is just three days away, rollovers will hint the directional bias. The 5.63 per cent fall in VIX is also a worry for now. The market can move on either side as the event risks are very high.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
