Nifty50 on 3 January
Nifty50, closed 184 points lower on Friday, snapping its two-day winning streak to close marginally above 24,000. It started the session on a muted note, taking cues from global markets, and continued to see profit booking in IT, pharma, and BFSI stocks. As a result, Nifty formed a Marubozu candlestick and failed to cross above Thursday’s high. A Marubozu candlestick signals robust market sentiment, either bullish or bearish.
On the weekly chart, the index formed a bullish candle and gained around 0.80% last week. It managed to hold above its key support level, the 50-week moving average (WMA). The broader market had a mixed performance, with the advance-decline ratio settling at 1:1.
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From a technical perspective, the index managed to hold above its 200-day moving average (DMA) but failed to hold above its 50-DMA. The 14-day relative strength index (RSI) is trending downward, positioned around 48 on the daily chart, while the moving average convergence/divergence (MACD) indicator is still trending negative.
The Nifty gained more than 1.7% with higher volume, so we upgraded the market condition to “confirmed uptrend” based on O’Neil’s methodology of market direction. We may downgrade this to “uptrend under pressure” if the distribution day count increases and Nifty breaches its key support level.
The index had reclaimed its 200-DMA and the psychologically important 24,000 level. Sustainable trading above this level could lead the index toward 24,450–24,500, followed by 24,800 in the coming sessions. But failure to hold above 24,000–23,900 may push the index back into a broader trading range of 23,400–24,000.
How Nifty Bank performed
Nifty Bank opened on a negative note on Friday and traded in a volatile manner for an hour before closing in negative territory. The index formed a bearish candle with a lower-high and lower-low price structure on the daily chart. On the weekly chart, the index formed a doji candle stick and lost around 322.50 points (-0.63%) over the week. It opened at 51,567.15, traded within 51,671.60–50,904.35, and closed at 50,969.60 after losing 616.75 points (-1.20%) on Friday.
The RSI has slightly bent downward to 42, while the moving average convergence divergence (MACD) remains in negative territory on the daily chart.
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According to O’Neil’s methodology of market direction, the index is in an “uptrend under pressure”. The distribution day count stands at two. A distribution day occurs when the benchmark index or a major sectoral index declines by 0.2% or more with trading volume higher than the previous day.
The index has been oscillating between the 200- and 100-DMA since 19 December, indicating a sideways move. Immediate resistance is positioned in the 51,800–52,300 range, while strong support lies between 50,600 and 50,500, with the 200-DMA in this price range.
Stocks to buy, recommended by MarketSmith India:
- Paradeep Phosphates Ltd: Current market price ₹120.66 | Buy range ₹117–121 | Profit goal ₹150 | Stop loss ₹108 | Timeframe 2–3 months
- Time Technoplast: Current market price ₹489.95 | Buy range ₹480–500 | Profit goal ₹610 | Stop loss ₹440 | Timeframe 2–3 months
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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