Nifty trades above 15,700 mark: Broader indices outperform; RS Software locks at upper circuit

Market update at 11:00 AM: The Indian markets were seen trading higher on Thursday with Nifty & Sensex gaining about half a per cent each. Nifty trades above the 15,700 mark while Sensex was seen trading within a striking distance of 52,200.   

All the sectoral indices were trading in green with Nifty PSU Bank and Nifty Pharma leading from the front. The advance-decline ratio is extremely positive; this is mainly due to the broader indices as Nifty Midcap 100 & Smallcap 100 have gained more than a per cent, each.   

Among stock-specific action, RS Software (India) Ltd, Hisar Metal Industries, Compucom Software, and KM Sugar Mills got locked at the upper circuit.   

On Wednesday, Nifty started the session with modest gains and as the day progressed, it went onto touch a fresh all-time high of 15,800. However, it erased all intraday gains, and at one point in time, it slipped below the 15,600 mark but recovery in the fag-end of the session helped the index to recoup some of its losses and settle down by 0.67 per cent at 15,635. Selling pressure was witnessed across the board as all the sectoral indices ended in red with Nifty Media, Nifty Realty, and Nifty Auto being the top losers. 

The price action of the day formed a sizeable bearish candle, which indicates the emergence of profit-booking at all-time highs. Furthermore, the index formed a widespread 5 (WS5), a price bar’s range-wide than the previous four bars’ range is the widest range in five days (WS5). The previous four trading sessions’ range was restricted in the range from 94-111 points and on Wednesday, the day’s range was 234 points, which is almost twice the 10-day average.   

Now, Nifty has filled its opening gap formed on June 3. Also, for the first time, it has closed below its prior bar since May 20 and in addition to this, it has also closed below its 5-EMA. Opening and the price action thereafter could be decisive in determining the future direction of the index. If we don’t see a follow-through, we could consider this a routine profit-booking after a smart upmove. On the other hand, if we see follow-through weakness, it will indicate that we are entering into a counter-trend phase, where the level of 15,400-15,450 is likely to act as strong support whereas, on the upside, the level of 15,800 may act as a resistance.