Volatility may increase further as onsolidation continues
For Tuesday, if Nifty trades above 18728, be with a positive bias and if declines below 18660 level, it’s better to stay sideways
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The benchmark indices on Monday traded with an increasingly volatile and closed flat. NSE Nifty closed at 18701.05 with 4.95 points gain. The Metal sector index led the market today with a 1.87 per cent. And the CPSE and PSU Bank indices were up by 1.87 per cent and 1.54 per cent, respectively. Bank Nifty and Realty gained by 0.53 per cent and 0.69 per cent, respectively. The Nifty IT, Auto, Pharma and Energy indices are down by less than 0.50 per cent. The market breadth is positive as 1140 advances and 792 declines. About 104 stocks hit a new 52-week high, and 105 traded in the upper circuit. Reliance, Rainbow, and Fluorochem were the top trading counters today in terms of value.
The Nifty recovered initial losses and closed flat. It formed a lower high and lower candle and hanging man candle. The volumes are lower than the previous day. It closed above the 5EMA. It took support at the 38.2 per cent retracement level of the prior upswing. The index traded with increased volatility, and the India VIX was up by 2.10. The Implied Volatility was increased to 11.81 from 11.5. During the first hour of trading, it declined sharply lower, below the 34EMA. It recovered to near the opening level. Interestingly, the RSI has broken out of a head and shoulder pattern on the hourly chart, and the Nifty closed above the moving average ribbon.
The MACD line bounced from the zero line. It is a bullish sign for tomorrow's trade. At the same time, the +DMI is above the -DMI. Though the market closed flat, the market breadth is positive. There is no major technical development, as the Nifty traded within the first hour's range, even after the recovery. For Tuesday, if the Nifty trades above 18728, be with a positive bias. In any case, declines below 18660 stay sideways. Only below 18600, we may get weak signals. The volatility may increase further from now onwards as long as consolidation continues.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
