Sideways trading continues

The domestic equity closed higher as the RBI monetary policy is expected lines. NSE Nifty gained by 150.20 points or 0.85 per cent and settled at 17871.70 points. On policy day, the Bank Nifty and FinNifty traded in the zone and closed on a flat note with 0.11 per cent and 0.49 per cent, respectively. All the sectoral indices were positive. The Nifty Metal index is the top gainer with 3.78 per cent. The Nifty IT and Pharma indices gained by 1.53 per cent and 1.36 per cent. The other sectoral indices advanced by 0.1 per cent to 0.9 per cent. The broader market breadth is positive as 1218 advances and 703 declines. About 79 stocks hit a new 52-week low, and 67 stocks traded in the upper circuit. Adani Enterprises, PayTM, and Reliance were the top trading counters in terms of value.

The Nifty tested the 20DMA and failed to close above it. It just closed above the four-day high and ended the last two days of inside action have ended. But it is still within the Budget day's range. The volume has not improved, and the Open Interest is also flat. On an RBI policy day, event risk, the Bank Nifty traded very much in the range. As soon as the policy was announced, the Implied Volatility (IV) sharply down, and Option premiums were eroded. As the weekly expiry is on the cards, low IV may result in impulsive moves soon.

The index closed above the short-term averages 5 and 8EMAs. The MACD line moved above the signal line and gave a fresh bullish signal. The RSI also closed above the four-day high, and it is below the 50 zone. As we mentioned earlier, the sideways action is continuing. The Nifty has formed a higher low and higher high candle and faced resistance at the 61.8 per cent retracement level of the recent downswing. It has to close above the 17872-880 zone of resistance for a positive bias. The Budget day high of 17972 may test by this weekend if the Nifty closes above the 20DMA. Any negative closing will extend the sideways and range.

(The author is Chief Mentor, Indus School of Technical

Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)