Wait and watch for a decisive breakout
Nifty up by 106.95 points and next week’s moves will be crucial for the market trend
image for illustrative purpose
Dalal Street sustained positive momentum for the second consecutive day with RBI' Covid relief package. The Nifty up by 106.95 points or 0.73 per cent and ended at 14724.80. Metal and auto sectors led the market with 2.51 per cent and 1.78 per cent gains, respectively. The market breadth is positive as 1067 advances and 790 declines.
Nifty Pharma index lost just 0.23 per cent. Interestingly, both PSU and private sector bank indices lost 1.17 per cent and 0.06 per cent, respectively, but the Banknifty gained by 0.13 per cent. The market witnessed 628 points of volatility since last Thursday. Even during the last five days, the Nifty traded in 439 points range. It lost 170.14 points or 1.09 per cent in the five days. India VIX down to 22.03 from 23.30.
The Nifty reclaimed above the 20DMA and faced resistance at 50DMA today. The Bollinger band flattened, indicating some days of consolidation within the 14880-14264 zone. The MACD histogram shows the pickup in bullish momentum. Interestingly, after four days, the positive directional movement indicator +DMI is up. The -DMI still above the +DMI but declining. The ADX is not showing any improvement in the trend strength down. Last week, the benchmark index took a support at 14469 parallel support line.
The chances of getting a bearish confirmation to last week's shooting star are very minimal now. It closed at Tuesday's high, and negated the previous day's inside bar bearish implications. In any case, the Nifty closes above 14734 with a volume on this weekend that will give positive bias for the overall market.
Above 14734, the Nifty may face resistance at 14800 and 14880 again. We need to wait, and watch for a decisive breakout. However, the Nifty fails to surpass the resistance zone, this time to the fall will be a sharper one, and may decline below the 14469. Next week's moves will be crucial for the market trend.
As the broader indices, Nifty Midcap-100, and Smallcap-100 indices, are trading at lifetime highs, the large-cap stocks lost the focus.
— The writer is a financial
journalist, technical analyst,
and family fund manager
