Nifty formed Doji pattern on the daily chart as the closing was near the opening level.
A Doji candle indicates indecisiveness among the bulls and the bears and also shows that bounces were being sold in the absence of follow-up buying interest.
Nifty gained 0.8 percent during the week and formed a small bullish candle. It continued its higher highs higher low formation on a weekly chart for the sixth week.
Nifty opened higher at 15796 and hit an intraday record high of 15835 in the morning followed by volatility but remained in the positive terrain throughout the session. Index ended at a record closing high of 15799, up 61 points.
Nifty scaled another high, as the steady drop in daily COVID cases fuelled hopes of a quick rollback of restrictions and opening up of the economy boosted sentiment.
Given the consistent rally in equity market for four consecutive weeks, turned cautious and expect the consolidation in coming sessions.
Markets extended gains in a range-bound session, in continuation to prevailing trend. After the initial uptick, the benchmark hovered in a range till the end however healthy buying in sectors such as metals, IT and auto kept the participants busy. Further, the anticipation of faster economic recovery and vaccination drive picking up pace too boosted sentiments. Consequently, Nifty ended at 15799 level, up by 0.4%. Broader markets ended in positive in the range of 0.1-0.4%.
Markets will first react to the IIP numbers in early trade on Monday. Going ahead, the progress of the vaccine drive and updates on the monsoon will be closely watched by the participants for cues. While the trend is bullish, the underperformance of the banking pack is certainly hurting the sentiment however we expect the bias to improve next week. Meanwhile, traders should focus on other sectors and use intermediate dips to add the selected stocks.
Nifty continued its gains into the fourth consecutive week, an indecisive Doji formation on daily the chart accompanied with narrower trading range with 266 points for the entire week is hinting at weakening momentum.
Moreover, certain technical oscillators on weekly chart appear to be overheated on the upside with overbought readings, whereas Relative Strength Index on daily charts registered a possible negative divergence formation as it failed to get past previous top unlike price chart.
Hence, from current level ideal trade set up for the week ahead should be sideways consolidation with a negative bias.
If the bulls manage to push the index beyond 15835, the rally may expand towards 15950/16000 but its sustainability will remain questionable.
If the Nifty slips below 15749, its initial target on the downsides shall be towards 15566.
For the time, Traders should remain neutral on the long side, whereas Intraday traders can short below 15749 and look for a target of 15566 level.
Sector Wise :- IT, metal and pharma indices rose 1-2 percent, while selling was seen in the FMCG and banking names.