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Nifty50 on 28 January
Nifty50, India’s benchmark index, snapped its two-day losing streak and closed 128 points higher at 22,957.25 on Tuesday. The index started the session with a gap-up opening at 22,960.45 and continued to gain intraday, taking cues from the RBIâs action to inject liquidity into the banking system. However, the index settled at 22,957.25. The Nifty formed a high wave doji candle with a higher-high and higher-low price structure on the daily chart. Rate-sensitive indices such as banks, financials, real estate, and the auto sector gained. Conversely, pharma, IT, FMCG, and metals sectors ended lower. The advance-decline ratio is inclined toward decliners as the ratio stands at 1:2.
From a technical perspective, the index attempted to reclaim 23,000 during intraday but failed to close above it. The 14-day, relative strength index (RSI), continues to trend sideways in a bearish trajectory and is currently positioned around 38. Another technical indicator, the moving average convergence/divergence (MACD), is still trending negatively below its central line.
According to O’Neil’s methodology of market direction, we shifted the market status to a âdowntrendâ on Monday, as Nifty breached its recent correction low of 22,976. Looking forward, we will shift the market to a ârally attemptâ when Nifty closes in the green for the first time or closes in the upper half of the dayâs range and stays above that low for three straight sessions. From there, we would prefer to see a follow-through day before shifting the market back to a âconfirmed uptrendâ.
Technically, the overall market sentiment has been negative for the past few weeks. The index managed to close in the green on Monday. Moving forward, 23,000 is a key level to watch as sustainable trading above it may move the index toward 23,400 in the coming few days. However, sustainable trading below 23,000 may remain lacklustre.
Also Read: Record FII exodus shakes Indiaâs stock markets even as domestic funds step up
How Nifty Bank performed
Bank Nifty saw a gap-up opening (578 points higher) on Tuesday and remained in positive territory throughout the day. The index formed a morning star candlestick pattern along with higher volume in yesterdayâs trading session. The index opened at 48,642.50 and traded in the range of 49,247.15â48,449.05, closing at 48,866.85, with a gain of 1.67%.
The 14-day, RSI slope has moved upward and is currently positioned around 43 on the daily chart. Another trend-following indicator, MACD, indicates positive crossover on the daily chart but still trending below the central line.
According to O’Neil’s methodology of market direction, we downgraded the market status to an âuptrend under pressureâ on Monday as Nifty Bank breached its current support level of 48,300 with an elevation in distribution days. Moving forward, the recent low, 47,898.35, is a key level to watch as we may shift the market status to a Downtrend when the index breaches it.
The index is currently below its key moving averages, indicating a negative bias on both the daily and weekly charts. However, morning star pattern formation suggests a sustainable bounce back from the current levels in the coming days. The current upside bounce back may lead the index toward 49,600â50,000 in the next few days.
Also Read: Sensex jumps 500 points; what drove the Indian stock market higher today? Explained with 5 factors
Stocks recommended by MarketSmith India:
Axis Bank Ltd: Current market price âš 983.80| Buy range âš 965â990| Profit goal âš 1,140| Stop loss âš 930| Timeframe 1â2 months
DLF Ltd: Current market price âš 726.75 | Buy range âš 710â730| Profit goal âš 805| Stop loss âš 688| Timeframe 1â2 months
Also Read: Dahlias project sets the stage for DLFâs rosy FY25 exit
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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