No directional cues as Nifty remains rangebound

The equities traded volatile and faced resistance at higher levels. The Nifty gained by 130.70 points or 0.53 per cent and closed at 24750.90. The Nifty India Defence index is the top gainer with 2.32 per cent. The Realty and Pharma are up by 1.75 per cent and 1.28 per cent, respectively. Smallcap, CPSE, Midcap, Infra, and Metal indices gained over 0.50 per cent. The PSU Bank, Auto, Private Banks, Media indices declined moderately. The India VIX is down by 4.21 per cent to 15.08. The market breadth is positive as 1738 advances and 1144 declines. About 72 stocks hit a 52-week high, and 126 stocks traded in the upper circuit. Cochin Shipyard, Eternal, BSE, HDFC Bank, and GRSE were the top trading counters, in terms of value.

In an increased daily trading range and volume day, the Nifty has formed a long upper shadow candle. It indicates the profit booking at higher levels. Though it closed positively, the price action is not giving confidence to be strongly bullish, as the day’s candle is in a bearish pattern. The Nifty closed just above its 20-day moving average (DMA), after several attempts during the day. The Defence and PSE stocks were in the limelight. During the last 13 weeks, the India Defence sector index gained 81.12 per cent and closed at a new high. This week, it is up by 4.79 per cent. PSU Banks and PSE stocks are showing momentum and higher relative strength. The focus is shifting towards these sectors. The index is still in the range and not giving any directional clues. It has formed a lower highs and parallel lows, and the price pattern looks like a descending triangle. A move above session’s high of 24900 is positive and resumes the upside momentum. However, if it declines below the 20-day moving average (DMA) or closes negatively, it will prolong the consolidation. As mentioned earlier, the 24492-464 is the crucial support zone for the ongoing consolidation. Stay neutral for now.

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