Positive move with caution likely

The market closed higher as all sectors participated in the rally. The NSE Nifty gained by 122.10 points and settled at 15,885.15 points. The main contribution for Monday's rally came from IT and auto sectors. The broader indices outperformed the benchmark index, as Nifty Midcap and Smallcap up by 1.56 per cent and 0.91 per cent. The Realty sector index up by 4.79 per cent. All the other sector indices advanced by an average of half a per cent. The market breadth is positive as 1,282 advances and 677 declines. About 240 stocks hit a new 52 week high, and 246 stocks traded in the upper circuit. The India VIX closed flat to positive at 12.80.

The Nifty closed above the previous day high and formed a Hanging Man candle. The lower volume is not giving confidence to the bulls. It is below the swing high on July 23. Interestingly, both days candles are looking similar. As the index closed above the 20DMA again needs to be with a positive bias. The RSI also closed above the prior swing high. The closing high is just 37 points away. A close above 15,925 will result in a breakout. The histogram shows a decline in the bearish momentum. The question is whether this low volume will be a reliable one? After gaining over hundred points, it consolidated and traded mostly sideways. The last hour of trading witnessed a volatile move. On a 75 minute chart, the NSE Nifty made higher tops, and it is above the MA ribbon. Let us hope for the positive move on Tuesday with caution. A negative will resume another lower swing.

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