RSI Is Flat In The Bullish Zone

The equities indices closed flat as the buying support is not enough to push the prices higher. The Nifty closed flat with just a 1.05-point gain at 25101.80. The Nifty IT is the top gainer with 1.67 per cent. The Media and India Defence indices are up by 1.09 per cent and 1.07 per cent, respectively. The Microcap, Pharma, and Commodities indices gained over half a per cent. The Realty index is the top loser with 1.14 per cent. The PSU bank is down by 0.52 per cent, and FinNifty declined by 0.47 per cent. The Banknifty is down by 0.37 per cent. All other indices gained or declined moderately. The India VIX declined by 4.87 per cent to 113.98. The market breadth is positive as 1609 advances, and 1302 declines. About 105 stocks hit a new 52-week high, and 116 stocks traded in the upper circuit. RPower, BSE, ICICI Bank, Adani Power, HAL and HDFC Bank were the top trading counters in terms of value.

The positive opening did not sustain as the banks and financials dragged the market. The Nifty has formed a bearish engulfing candle. After the RBI policy push, the indices broke above the consolidation range. But, the index has formed indecisive and bearish candles for the last two days. The opening gains couldn’t be sustained. Still, there are now confirmed weaker or reversal signals. However, the index indicates some signs of exhaustion. Monday’s price pattern resembles an evening star, which is a classic exhaustion candle. Tuesday’s candle almost confirmed the evening star’s implications. The volumes were higher than the previous day. The RSI is in the bullish zone and flat. As the index is trading at the breakout level, the undertone is bullish. If the index fails to continue to be positive, it may test Monday’s gap. The index needs to be strongly bullish to resume the decisive uptrend. As mentioned earlier, the 24350 is a strong resistance. On the downside, a close below the gap area of 25029 will test the 20 DMA of 24832. The Bollinger Bands are contracting again. For now, stay neutral to positive as long as it trades above the 25000 level.

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