Nifty fails to close above 10-wk avg

NSE Nifty witnessed a surprising rally last week due to short-covering. The benchmark index traded in the 736-point range and finally closed at 191.35 points or a 0.80 per cent gain. The BSE Sensex was up by 0.67 per cent. The Midcap and Smallcap indices advanced by 1.67 per cent and 1.48 per cent, respectively. The FMCG and Pharma indices gained by 2.43 per cent and 1.11 per cent, respectively. On the flip side, the Realty index was down by 2.45 per cent, and Bank Nifty declined by 0.63 per cent. The Market breadth is mostly positive. The India VIX is by 2.29 per cent to 13.54. The FIIs sold Rs3,02,434.91 crore last and Rs4,503.21 crore in the last three sessions. The DIIs bought Rs5,26,545.13 crore last year and bought Rs2,533.11 crore this week.

After a dull trading week, the Nifty witnessed surprising moves last week. It formed a long-legged, small body candle. The index failed to close above the 10-week average after a 0.80 per cent net gain, though it moved higher. The Volumes are higher than the last week. 50-week average acted as support again for the second time in the third time in the seven weeks. Apart from this, it is important to hold 200EMA and 200DMA. The index tested the 200EMA for the sixth time since June 2022. The seventh support is rare. So, it is time for a bounce or break from here.

The index failed to move above the 24,770 zone of resistance to resume the uptrend. It faced stiff resistance and formed a double top kind of pattern. After a 5.62 per cent decline, it again retraced 50 per cent. In a surprising move, it filled the 19th December gap and closed above the 50DMA, but failed to sustain. The fall with high volume is a concern now. Both 20 and 50DMAs are in the downtrend. Now, the question is whether the index will move above the 50DMA close above the 24,226 (Thursday high) or not. If it is able to close above this swing high, the uptrend will resume and can test 24,414 immediately. Above this, the prior swing highs of 24,792 and 24,857 is the target zone. If it tested this zone, the index will form an ascending triangle on a longer timeframe.

As mentioned in the previous columns, the Dollar-Rupee and Dollar index hit a new high. The Dollar index broke out of a two-year ascending triangle and hit $109.53 last week. The USDINR is now 85.74 and may test 91.45 in the short term. The India foreign exchange reserves declined to $640.27 billion, an 8-month low. Apart from this, the US 10-year bond yields rose to 4.60.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)