Nifty witnesses fresh buying interest

Equities rallied on the monthly expiry day, with short covering and renewed buying interest. Nifty was up by 129 points of 0.76 per cent. Nifty Metal, Auto, and IT sectors led the recovery with 1.11 per cent to 2.44 per cent gains. Media and Realty indices also gained by 2.65 per cent and 2.46 per cent. Only Nifty Energy index is the loser by just 0.07 per cent due to a fall in Reliance. All other sectoral indices gained by less than per cent. The PSU bank index was up 3.22 per cent and is the top gainer on Wednesday. Midcap and Smallcap indices also gained by over 1.5 per cent each. The India VIX is down by 5.95 per cent during the last four sessions. On Wednesday, it declined by 19.75 per cent to 13.62. The market breadth has improved to positive as 1414 advances and 538 declines. About 307 stocks hit a new 52-week low, and 83 stocks traded in the lower circuit. HDFC Bank, ICICI Bank, and Reliance were the top trading counters in terms of value.

The Nifty price action is limited to the 24th March range for the last four days. As mentioned earlier, the Nifty has to break the 16917-17109 for a directional bias. It registered the breakout with the help of over 113 points rally in the last 30 minutes of trade and negated the possibility of another inside bar on Wednesday. The indecision at the bottom is confusing the traders.

At the end of the day, the Nifty closed below 17109, which resulted in a breakout that was not on a closing basis. Wednesday's strong bullish bias has to move above the 17208 for a double-bottom breakout. The last ten days of the range was limited to 17208-16913 mostly. This 300 points range breakout will lead to a sharp pullback towards 20 DMA at 17218. In other words, the 17208- 218 works as a strong resistance for now. The Nifty closed on a positive note, with a strong spurt in the cash volumes, which is a sign of fresh buying interest. Another positive factor of the day is that all the sector indices closed in the positive territory, showing broader market participation. Only the Energy index closed flat to negative. The index has formed a higher low and higher high on Wednesday, and the RSI closed above the prior swing low. For the fourth consecutive month, the Nifty is forming a bearish candle after over a decade. As stated earlier, the downside is limited to the 16747-598 zone of strong support. If the index closes above the 17218 decisively, it will test the 18000-114 zone. At the beginning of the new financial year, let us be optimistic for now.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)