INSUBCONTINENT EXCLUSIVE:
The bulls on Dalal Street have found their mojo back and the NSE Nifty has seen solid gains in the last two sessions
With this move, the index has once again attempted a breakout.
That being said, over the past many weeks, the market breadth was an area of
Each upmove had come with a fractured breadth.
For the market to enjoy a secular rally, it was important that it came with a healthy market
Keeping Nifty aside, which might see some consolidation at the higher levels, we examine the CNX500 chart, which suggests that we might be
in for a stable market breadth over the coming days.
CNX500 is a broader market index; it is comprised of 500 stocks, which represent over
95 per cent of the floating market cap of all stocks listed on the NSE.
In the daily chart seen above, the RS Line appears to have reversed
its downtrend and now looks to inch higher
It has penetrated its 50-DMA
The CNX500 has also penetrated the 200-DMA, consolidated briefly, and has continued to move higher.
The index looks slightly overbought on
the RSI and Stochastic, which may cause it to consolidate
In any worst-case scenario, as long as the CNX500 holds the 9,100 mark, it will help the market breadth stabilise and improve
gradually.
Similarly, as seen on the weekly chart above, CNX500 index has resisted the 50-Week MA for nearly 15 weeks and has attempted a
This 50-Week MA, which is at 9,213 has almost acted as a proxy trend line.
On the weekly charts, the MACD remains in continuing buy mode
We should not conclusively read the weekly indicators as the week is incomplete and the final bar may change.
Overall, the 200-day MA level
of 9,185 and 50-week MA of 9,213 are very important levels to watch in the coming days
This means that as long as CNX500 keeps its head above the 9,200 level, the market breadth will not deteriorate
Any slip below the 9,200 level will again cause cracks in the market breadth.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at
Gemstone Equity Research Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
