As the geopolitical tensions along the Indo-Pak border increased, the initial gains were reversed by the stocks. The NSE Nifty closed with a 0.79 percent increase, exceeding 24,000. The BSE Sensex has increased by 0.84 percent. The mid-cap and small-cap indices of the broader market indexes saw gains of 1.73% and 0.83%, respectively.
The largest gainer, at 6.56%, is the Nifty IT index. The indexes for autos and real estate saw gains of 2.91 and 1.69 percent, respectively. Conversely, the Consumer Durables index declines by 0.80% and the Media falls by 2.11 percent. At 17.16, the India VIX has increased by 10.93%. The FIIs kept purchasing stocks. They purchased stocks last week for Rs17,796.39 crore. Last week, the DIIs purchased Rs. 1,131.81 crore.
The Nifty ended on the 50-week average support after forming a Shooting Star candle on a weekly time frame. It regained the 200 DMA and started the week well. But by the conclusion of the week, the index sits at 24,050, slightly below the 200 DMA. Even in rupee terms, it reached its peak volume after the first week of June. All of the short-term averages are now rising. Right now, the Nifty is 4.37 percent higher than the 50DMA.
Volumes have been recorded above normal since the impulse started, indicating accumulation after an index correction of 17%. Despite the negative and erratic market behavior over the last four days, the index has not yet received confirmation of a reversal. In any event, the Nifty will get a clear negative confirmation if it closes below the 50-week average of 23925 or 23847.
The Nifty closed below Wednesday’s low, filled the latest Monday gap region, and validated the downward implications of the inner bars. The index recovered in the afternoon after finding support near the 8 EMA. All sectoral indicators were negative, indicating the selling pressure in the overall market. When compared to the other sectors, only the IT index may outperform.
The RSI’s negative divergence is now vividly visible. In any event, the market will continue to weaken if it closes below 60. A closing below 23295-847 will be bearish, as previously said, and it may challenge the next support level of 23360. The Nifty may test 23051, which has a larger likelihood below this. On the plus side, the uptrend must be resumed with a closing above 24365. The market has a definite negative signal and is tense at greater levels.
The consolidation is expected to occur within the next two months. The remaining three weeks, or 21743–24365, will be the consolidation range. The move is impulsive by at least 50% of the previous one, which has already been completed, after the conclusion of a bear market pullback. It’s time to make the adjustment. The Nifty is likely to form a final triangle with two upswings and two downswings.
Large-cap and high-quality equities will do better than the overall market during the consolidation phase. Commodities, Metal, Consumption, and BFSI companies will do better than the Nifty-500 index. For the next two months, concentrate on equities with low beta and 20% earnings growth.
(The author is a financial writer, technical analyst, trainer, chief mentor at the Indus School of Technical Analysis, partner at Wealocity Analytics, and a research analyst registered with Sebi.)
