Nifty Trades In Narrow Range; Trend Under Pressure

The equities traded nervously in the range on a low-volume day. The Nifty gained by 77.70 points or 032 per cent and closed at 24620.20. Only the Realty index is down by 0.72 per cent. All other sectoral indices ended in positive territory. The India Defence, Midcap, Small-cap, CPSE, Commodities, Oil and Gas, Metal and Energy indices up by 0.50 per cent to 0.86 per cent. The other indices ended with moderate gains. The India VIX is down by 4.89 per cent to 5.74. The Market breadth is positive as 1650 advances and 1236 declines. About 58 stocks hit a new 52-week high, and 105 stocks traded in the upper circuit. Cochin Shipyard, Indigen, IRCON, GRSE, and ABFRL were the top trading counters, in terms of value.

Reliance and HDFC Bank added strength to the market and held the support. The Nifty has formed an inside bar and is holding the 24494-462 support zone. It traded in a narrow range of just 102 points on a very thin volume. In a lacklustre trading day, the index has not given any directional view. The broader market breadth is positive, showing some resilience to decline. After three days of trading, the Nifty is trading below the previous bar’s low and forming a long-legged, small-body candle. As it formed a lower high and lower low candle, the trend is still under pressure. The Nifty is holding the highest number of distribution days in recent times, nine, which is not good for a bullish bias. The relative strength compared to the Nifty-500 is also declining. Several of the sector indices are losing momentum. The Nifty must close above the 20 DMA of 24725 to resume the upside momentum. A close above Tuesday’s high of 24845 will be most positive. In any case, a decline below 24462 will be negative, and the downtrend begins.

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