RSI Back In Bullish Zone

The index is decisively above 200DMA. Now, the rally will continue to form new highs by the next two quarters, with some counter-trend consolidations. When the price moves sharply, all the indicators show a bullish bias

As the geopolitical tensions eased, the US-China tariff war cooled off, and the Russia-Ukraine war was about to enter a ceasefire, the markets cheered with a big rally. The equities registered one of the strongest bullish days in the last four years. NSE Nifty gained by 916.70 points or 3.82 per cent and closed at 24,924.70. Only Pharma is the underperformer as it gained by just 0.10 per cent. A majority of sector indices gained over 2.5 per cent. The Nifty IT index is the top gainer with 6.70 per cent. The Realty and Metal indices were up by 5.93 per cent and 5.86 per cent, respectively. The Microcap, and Smallcap indices were advanced by 4.63 per cent and 4.24 per cent. The Energy, FinNifty, Services, Midcap, and Commodities indices are up by over four per cent. The India VIX is down by 15.12 per cent to 18.36. The market breadth is extremely positive as 2,614 advances and 329 declines. About 47 stocks hit a new 52-week high, and 322 stocks traded in the upper circuit. BSE, HDFC Bank, Infosys, HAL, and Mazdock were the top trading counters in terms of value.

With the positive developments on all fronts, the benchmark indices rallied to a new major swing high. The Nifty formed a higher high above 24,857, by testing 24,907. The volumes were recorded above average, and the index registered a breakout of the last three weeks of wavering sideways. The index is decisively above the 200DMA. The broader market rally with strong breadth shows that bulls are back. With this session’s move, the index has retraced by 70 per cent of the prior decline. Any move above the 61.8 per cent retracement level is considered the end of the bearish trend. As mentioned earlier, the market turned positive in May. Now, the rally will continue to form new highs by the next two quarters, with some counter-trend consolidations. When the price moves sharply, all the indicators show a bullish bias.

The RSI is back into the bullish zone. The weekly RSI shifted its range into the bullish zone after September 2024. The MACD has given a bullish signal again. However, after an unexpected over three per cent rally, expect some profit booking. Wait for a small consolidation to take a fresh entry. It is time to be with a positive bias, build the new portfolios.

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