Profit booking likely on expiry day
Nifty rallied 147 pts and closed above the 200DMA. The MACD declinedand RSI bounced from 30 zone. Expect another 2-3 days of positive bias; It needs to follow through day to protect the gains; Naturally, the volatility will be higher on expiry day; The volume is the lowest since Feb 16, and the Open Interest has not increased as much as the price rise
The market has ended an eight-day losing streak and closed at three day high. NSE Nifty gained by 146.95 points or 0.85 per cent and settled at 17450.90. The beaten-down Metal and the PSU Bank indices were the top gainers on Wednesday with 3.96 per cent and 2.98 per cent. The Nifty IT, PSE, CPSE, and Realty indices gained by 1.1 per cent to 1.46 per cent. All other sectoral indices gained by 0.15 per cent to 0.9 per cent. The India VIX is down by 7.31 per cent. The market breadth turned positive after a long time, as 1534 advanced and 416 declined. About 96 stocks hit a new 52-week low, and 102 stocks traded in the upper circuit. Adani Enterprises, Reliance, and HDFC Bank were the top trading counters today in terms of value.
Finally, the Nifty has recovered and closed above the 200DMA decisively. It also closed above the previous day's high. With the broader market participation, the Nifty rallied by 147 points. It opened with a positive gap, and sustained the gains till the end of the day. The RSI bounced from the 30 zone. The MACD histogram declined, showing that the bearish momentum has reduced. The Nifty tested the 23.6 per cent retracement level (17462.7) today. A close above this tomorrow means it will test the 200EMA of 17610 or 38.2 per cent retracement level of 17591. The rally was expected lines, but delayed by a day. As mentioned yesterday, the hourly RSI positive divergence got the confirmation for its bullish implication. For now, as long a previous day's low is protected, we can shift the market status to a rally attempt. It needs to follow through day to protect the gains. The weekly expiry may attract some profit booking. Naturally, the volatility will be higher. The volume is the lowest since February 16, and the Open Interest has not increased as much as the price rise. This data shows the rally is mainly due to the short-covering. Expect another 2-3 days of positive bias. But a negative close will dampen the positive sentiments.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
