Profit Booking Likely In Short Term

The domestic equities registered a massive rally, mainly due to short covering. NSE Nifty gained by 414.45 points or 1.77 per cent and closed at 23,851.65 points. All the sectoral indices closed in positive territory. The FinNifty, Private Bank, and Bank Nifty were the top gainers with over two per cent. The Services, Infra, PSU Bank indices advanced over 1.5 per cent. All other indices registered decent gains. The India VIX is declined by 2.51 per cent to 15.46. The Market breadth is positive as 1,847 advances, and 1,047 declines. About 63 stocks hit a new 52-week high and 116 stocks traded in the upper circuit. HDFC Bank, ICICI Bank, SBIN, Bharti Airtel and Infosys were the top trading counters, in terms of value.

The Nifty registered a new high close after January 3. It tested the prior swing high, too. The high-volume, strong bull candle shows the strength in the buying demand. The Nifty has formed a most bullish candle after January 2. The RSI shifted its range into the strong bullish zone, which is a positive development today. The MACD has given a fresh bullish signal. The previous eight days’ fall was retraced 100 per cent in just 60 per cent of the time. The Index has formed a base with an impulsive rally in the last six days. Technically, the index has strong bullish strength. As it retraced 100 per cent of the prior down swing, we need to watch the extension levels. Many leading stocks have registered the breakouts, and some of the banks and financial services stocks made a new high. As stated earlier, these two sectors will lead the market further. For now, stay very positive for the medium to long-term perspective. In the short term, we may see some profit booking and a downswing to form a higher low.

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