Wait for a buy signal as Nifty in neutral stance
The NSE Nifty recovered most of the previous day's losses and registered a 102.40-point gain. It closed at 15,737.75 points with a positive market breadth and broader market participation. Media and realty indices gained the most by 4.24 per cent and 3.34 per cent. The broader indices, Nifty Midcap-100 and Smallcap-100, advanced by 1.57 per cent and 1.61 per cent respectively. Bank Nifty and IT indices up by 0.95 per cent. Only Auto index declined by 0.11 per cent. The market breadth is extremely positive as 1523 advances and 439 declines. About 200 stocks hit the new 52-week high and 222 stocks were in the upper circuit.
The market consolidated in a small range since last Thursday. The Nifty gained just 50 points in the last five trading sessions. Wednesday's move engulfed the previous four days move. It faced resistance at 127.6 retracement (15785) of prior fall. It tested for three days and declined.
After a series of Hanging Man candles, the bulls have finally surrendered on Wednesday with a one per cent drop. It has registered a distribution day after a long gap. After a 240-point range, the Nifty has formed an inside bar on Thursday. With Wednesday's decline, the technical price structure has been disturbed. We are suspecting about the strength of the bulls, as low volume, low momentum persisting. On a weekly chart, the index is forming a Doji candle. Steve Nison's principle says a Doji at a lifetime needs a closed below to it for bearish confirmation. Index achieved all the short-term targets on Wednesday and retracing. A decisive close below the 15,566 will lead to a significant weakness. Though the Nifty gained 100 points, the momentum indicator, MACD histogram declined further down. Even the positive directional indicator +DMI also declined. The Elder impulse system shows, the index is in a neutral stance. As the Nifty formed an inside bar, Wednesday's high 15800 and low 15566 will act as resistance and support for the next few days. In any case, the Nifty closes above the 15,800 points, the weekly MACD may give a buy signal.
(The author is financial journalist, technical analyst,family fund manager)