Nifty in uncharted territory

NSE Nifty closed higher for the sixth successive week and above the 24,500 points. Nifty gained 172.70 points or 0.71 per cent last week. The BSE Sensex also gained by 0.65 per cent. The broader market indices closed flat. Nifty Midcap-100 and Smallcap-100 indices are up by just 0.15 per cent and 0.04 per cent. On the sectoral front, the FMCG and IT indices advanced by 3.56 per cent and 3.45 per cent. On the flip side, the Nifty Metal is down by 2.63 per cent and 2.32 per cent, respectively. The Market breadth is 1:1 during the week. The India VIX up by 8.11 per cent to 13.73. FIIs bought Rs10,718.65 crore and the DIIs also bought Rs5005.38 crore worth of equities during the current month.

The Nifty has been on a record-breaking spree, reaching new highs almost every alternate day. In the last 28 days, it has registered 17 new lifetime highs, a testament to its potential. From the 4th June low (election result day), the Nifty gained by 3,310.75 points or 15.56 per cent in just 27 trading sessions, a remarkable feat. The fact that the weak days were not exceeding more than a day or two in this massive rally is particularly interesting. Currently, the Nifty is holding only two distribution days, which indicates a strong bullish trend, further fuelling excitement about its potential.

The index is now in uncharted territory and well placed above all long and short-term averages. All moving averages are in an uptrend. The 8EMA support is at 24,314 and will act as a strong support. Last week, the index breached this support on an intraday basis. For early signs of weakness, the index must close below the 8EMA and the prior week’s low, currently at 24,141 points. Because of last week’s tight six-day consolidation, the MACD shows an exhaustion in the momentum. The RSI is in an overbought condition. The Nifty IT index is just a few points below the all-time high. It has given early signs of bullish strength in Relative Rotation Graphs by improving the momentum and relative strength for the last two weeks.

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