Nifty will see sharper swings

With a sharp bounce in the last hour, the markets able to close in a neutral to positive bias. The benchmark indices closed flat for the second consecutive day. The Nifty just 1.30 points higher and closed at 15576.2, and the BSE Sensex up by 85.34 points. Both indices traded in the negative territory for the majority of the time. The PSU Bank and the Metal indices rallied the most with a 3.03 per cent and 2.18 per cent gain. The Nifty Auto up by 1.82 per cent, and the Energy index advanced by 1.23 per cent. The broader Nifty midcap-100 and smallcap-100 indices outperformed as they advanced by 1.43 per cent and 1.31 per cent, respectively. The market breadth is positive as 1383 advances and 535 declines. At least 180 stocks hit the upper circuit, and 135 stocks touched the new 52 weeks high.

The Nifty closed flat for the second consecutive day. It gapped down at open and sharply higher in the last hour of trading. It gained 116 points from the day's low. The suspicion of tiredness in the trend still valid as the Nifty formed another hanging man candle. However, it recovered sharply from the low and closed much above the opening level, hanging man candles at a swing high and before the event risk (RBI Policy), and indicating caution. The late rally in the Metals and Auto gave a boost to the index. The Nifty almost witnessed a V shape recovery on an intraday basis. On the hourly chart, the histogram yet to show the positive momentum. Hourly ADX is also still below the desired 25 for a bullish strength. We expected this kind of volatility, and we may further increase the daily swings. As the weekly derivative expiry on the cards, the swings will be more and more and sharper. Today's low of 15460 and Tuesdays' high of 15660 will act as support and resistance for this week. Either side breakout will also be an impulse move. There is a probability of closing between these levels on Thursday.

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