We suspected last month that market might get stuck in a range and now we have the results. So is this temporary phase (taking breather) or something else!!! Let's see if charts telling us something...
Below weekly Nifty chart is clearly displaying range bound action. Market is not able to move above 18500 area and at present stuck between 200SMA and 18500 area. As long as market is not breaking down and remains above 200SMA, then we can conclude that market is taking rest for now.
Daily Nifty chart below is also not providing any better clues.
Nifty advance decline line is in downtrend and suggesting that more stocks are not participating in up action which might be causing the drag on the market.
The biggest clue comes from below chart. Number of stocks above their respective 50SMA and 200SMA, both lines are trending down which is a sign of weak market and results in market going sideways or breakdown.
It is very clear at this point that we need more participation from stocks for any rally to be sustained but it might take a while. Also interest rates are rising from March in US which has impact across all financial markets across the world, market might be just taking a pause before achieving equilibrium. Expect range bound action for sometime before any meaningful rally.
Market remains range bound, but be cautious!
Market remains range bound, but be cautious!