Index trend and stocks in action November 20, 2019

The first hour of Tuesday's trading session was a mirror image of the previous trading session, where the Nifty 50 opened the session on a positive note but, soon enough, gave away its opening gains. However, buyers on Tuesday grabbed the opportunity with both their hands and the index eventually closed with 0.47 per cent gains at 11,940 levels. The index heavyweights, especially Reliance Industries and Banking stocks played a crucial role in the up move. Despite all this, the benchmark index remains trapped in the 11,800-12,034 range.

Technically, the price action of the day formed a small body bullish candle with minor lower shadow and closed above the 8 EMA. Though, if we dig deeper, we can see that the gap between the Nifty and its rising 21-DMA has shrunk due to the consolidation over the last three weeks. At the start of November, the index was trading above its 21- and 50-DMA by 3.5 and 6 per cent, respectively. However, at present, Nifty is trading 1.2 and 4.2 per cent above its 21 and 50-DMA, respectively. Technically, nothing much has changed and the Nifty is still stuck in the same old loop of 11,800-12,034. Nonetheless, if we move to a lower timeframe, that is, on an hourly timeframe, the Nifty has crossed a falling trendline, which is positive. Now the onus is on the bulls to have a follow-through move and soon cross above the recent swing high of 12,034. Once it crosses this mark convincingly, it would open gates for a rapid move. Until this happens, we would continue to see the markets carrying on the trade in a broad range without any clear directional bias.

All-in-all, the Nifty may continue to trade in this broad range of 11,800-12,034. However, traders are recommended to mark levels of 11,800 and 12,034 on their charts as, once these levels are decisively penetrated, it would be time to get into the action.