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Neutral to positive bias likely

As weekly derivative expiry is closer, expect some wild moves

Neutral to positive bias likely

The equity benchmark indices recovered by over 200 points from the day's low on Wednesday. The Nifty gained by 49.15 points or 0.27 per cent and settled at 18315.10. The Nifty Auto and Energy indices were the top gainers with 0.75 per cent. PSU Bank index is the top loser with 1.06 per cent. Nifty Metal, IT also declined by 0.25 per cent and 0.12 per cent. The Advance-Decline Ratio is positive at 1.32. The India VIX closed at 13.08, up by 3.19 per cent. About 49 stocks hit a new 52-week high, and 46 stocks traded in the upper circuit. HDFC Bank, ICICI Bank and Reliance were the top trading counters today in terms of value.

The Nifty recovered over 200 points from the day's low and formed a dragonfly doji candle. The benchmark index opened with a 45 points positive gap and declined sharply in the first hour. The momentum declined further, and the volume receded. The recovery is led by auto stocks and private banks. Though it recovered from the low, the index has formed a lower low and lower high candle. Dragonfly candle formation at the bottom is a sign of reversal. As per Steve Nison's doji principle, an open and close above the doji is a positive sign. As the weekly derivative expiry is scheduled, expect some wild moves. As the index closed above Monday's high, with a positive bias, assuming that Wednesday's dip is used for buying opportunity. The daily RSI is flattened in the bullish zone. The negative divergence in an hourly chart is still intact in RSI and MACD. As the market breadth is favourable to advances, be with a neutral to positive bias for the expiry day.

(The author is chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst, trainer and family fund manager)

T Brahmachary
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