Nifty50 on 27 December
Nifty50, the benchmark index of the Indian stock market, took support around its 50-week moving average (WMA), currently placed around 23,570, and formed a small green candle on the weekly timeframe chart. It gained around 1% over the last week. On the daily chart, it remained volatile over the last week and hovered around its 200-day moving average (DMA), which is currently placed around 23,860. it formed multiple doji candles on the daily chart and failed to close above its 200-DMA.
On Friday, the index opened at 23,801 with a small gap-up and traded within the range-bound zone of 23,940–23,800, closing at 23,813 with a mild gain of 0.27%. Market action on Friday formed another doji candle with an upper wick, indicating selling pressure at the day’s high. The advance-decline ratio settled on a flat note, 1:1.
Technically, the index has been trading below its 200-DMA for the past five trading sessions and is facing strong resistance around it. However, on the weekly chart, support is placed around its 50-WMA. The momentum indicator, 14-day relative strength index (RSI), is trending in the flat zone with a negative bias and is placed around 41 on the daily chart, along with a negative crossover on moving average convergence/ divergence (MACD).
According to O’Neil’s methodology of market direction, the current market status is in a “rally attempt”. A rally attempt begins on the third day when the index closes higher off the most recent bottom after being in a correction (also known as downtrend).
The index is currently hovering below its 200-DMA and trading within a range-bound zone of 23,600 to 23,900. Technically, strong support is placed around 23,600–23,500. However, on the upside, the index must cross and hold above 23,900 to move toward 24,200, followed by 24,500–24,600.
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How Nifty Bank performed
Nifty Bank opened on a positive note and remained in positive territory on Friday. It formed a bullish candle on the daily chart and gained around 141 points (+0.27%), but is still trending below its 100-DMA. The index opened at 51,268.20 and traded in the range of 51,628.45-51,240.10 and closed at 51,311.30.
Likewise, on the weekly chart, the index gained around 1.09% and formed a small bullish candle, which indicated support around 50,600–50,700 from the weekly chart perspective.
RSI has been moving sideways and is currently positioned around 42, while the MACD remains in negative territory on the daily chart.
According to O’Neil’s methodology of market direction, the index is in an “uptrend under pressure”. Currently, the total distribution day count remains at three. A distribution day occurs when the benchmark index or a major sectoral index falls 0.2% or more on higher volume than the previous day.
Currently, the index is fluctuating between the 200- and 100-DMA, indicating a sideways movement. Immediate resistance is positioned in the range of 51,700–52,000, while strong support is placed around 50,500–50,400, as the 200-DMA is placed in this particular price range.
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Two stocks to buy, recommended by MarketSmith India:
Garden Reach Shipbuilders and Engineers: Current market price ₹1,695.80| Buy range ₹1,650–1,700| Profit goal ₹2,220| Stop loss ₹ 1,518| Timeframe 2–3 months
Mangalam Cement: Current market price ₹ 981.10 | Buy range ₹ 960–985| Profit goal ₹1200 | Stop loss ₹ 880| 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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