Nifty back in green: Buy-the-dip strategy works again; J&K Bank and Birla Cable lock in 20 per cent upper circuit

Market Update at 1:20 PM: Nifty has recovered almost 180 points from the lower levels and were seen trading near the day’s high around the 15,691 mark. The broader markets, which were seen underperforming in the last couple of sessions, found their mojo back and on Monday, they were seen outperforming frontline indices. As a result, market breadth improved and tilted in favour of advances.   

Among the sectoral indices, Nifty Media, Nifty PSU Bank, and Nifty Realty were the top gainers as they surged over 1 per cent each. On the other hand, Nifty IT and Nifty Auto were the top losers.   

Meanwhile, stock-specific action continued and two stocks namely, J&K Bank and Birla Cable got locked at their respective upper circuits of 20 per cent each.   

Market Update at 10:15 AM: The Indian benchmark indices started the week on a weak footing amid feeble global cues. However, after a gap-down opening, the indices recovered from the lower levels and were seen trading off the day’s low. 

Nifty and Sensex were seen trading at 15,580 and 52,000 levels, respectively. The broader market indices were also trading in red with Nifty Midcap-100 and Smallcap-100 slipping by 0.81 per cent and 0.43 per cent, respectively. India VIX surged more than 7 per cent and it was seen hovering around the 16-mark.   

All sectors were trading in negative terrain barring Nifty FMCG, which was trading with modest gains of 0.3 per cent. Nifty Auto and Nifty IT sectors were seen dragging the index.   

Among stock-specific action, these are some of the stocks, which got locked at their respective upper circuits. The list includes BLB Ltd, Lypsa Gems, LGB Forge, Dharani Sugars, BL Kashyap, Rama Steel Tubes and so on. 

Nifty snapped its four-week winning streak amid subdued global markets. The indices witnessed volatile impulse moves during the week.  

Nifty closed at 15,683.3 with a 116-point loss as against BSE Sensex, which lost a mere 0.2 per cent. Meanwhile, the broader markets underperformed the frontline indices as Nifty Midcap 100 and Smallcap 100 ended down by 3.05 per cent and 1.81 per cent, respectively. Nifty FMCG index was up by 1.8 per cent while the IT index advanced by 0.8 per cent. The remaining sectoral indices closed lower for the week. The metal was down by 6.6 per cent and emerged as the big loser. Pharma, auto, energy, PSU Bank, and realty indices declined in the range of 3 to 4 per cent. FIIs turned buyers once again and bought Rs 5,848.76 crore during the current month. DIIs sold Rs 2,293.06 crore worth of equities. The advance-decline ratio was mostly positive during the last week.  

On the daily chart, Nifty formed a small-bodied negative candle with a long lower shadow, indicating a sharp recovery from the lower levels. Dips were also bought. On the other hand, it formed a spinning top-like candle on the weekly scale.  

During the last trading session of the day, Nifty breached its 20-DMA and reached a swing low of 15,450, resulting in a classical throwback. Thereafter, it smartly recoiled from the support point placed around 15,450 level and reclaimed its 20-DMA, which is a positive indication. Having said that, the sequence of lower high & lower low is an ominous sign.  

Going ahead, the level of 15,600 is an important support level, and the failure to hold above this level could result in the re-test of 15,400-15,450 in the near term. On the upside, the level of 15,770 is likely to act as a resistance level.   

The daily MACD has already given a sell signal by moving below the signal line. The CCI is below the prior swing low, which is a sign that the minor top is in place. The RSI is also below the prior minor low and has broken the support. The negative directional indicator i.e. the DMI is almost at its February high, which indicates that the weakness is in trend.