The equities rallied for the fourth successive week and reached near an all-time high. NSE Nifty gained 262.60 points or 1.41 per cent in the last five trading sessions. The 30-share BSE Sensex is up by 1.21 per cent. On the sectoral front, the Nifty Realty and FMCG indices were the top gainers with 3.74 per cent and 3.48 per cent, respectively. Only Bank Nifty ended with just a 0.12 per cent decline. FIIs bought Rs6,886.77 crore, and the DIIs bought Rs4,329.75 crore during this month. India VIX declined to 10.84, its lowest close after December 27, 2019 (10.53).
The Nifty almost retraced 100 per cent of the prior fall. Now, the Fibonacci Extension level of 127.6 per cent is at 19,550. This can be achievable after retesting a breakout. In any case, if the breakout fails by closing below the previous week’s low, the probability of extending the rally will be low. The weekly RSI made a fresh high, above the 20th November week, which is a bullish signal. But the daily RSI still have a negative divergence. The weekly MACD line has yet to make a new high, but the histogram shows bullish momentum. For next week’s opening, stay positive and continue the long positions if any. A move above 18,888pts will result in a breakout and can test 19,000-19,145 level. As we stated earlier, the bears will not get a chance to dominate the market unless it closes below the prior swing low. The rally in the global markets also fuelled the sentiments. Now, only a close below 18,710-662 will give early signs of weakness. The 8EMA support is at 18,693pts, and the 20DMA is at 18,563pts. Even the minor swing low is at 18,555pts. This zone of 18,555-693 is very important to continue the rally. There are increased chances of hitting a new lifetime high next week, any time.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)