73% of Nifty50 stocks above 50-EMA: What this signal means for traders

Market breadth has turned decisively positive, with 73% of Nifty 50 stocks now trading above their 50 EMA, signalling expanding participation in the ongoing rally. According to Rupak De, Senior Technical Analyst at LKP Securities, this sharp improvement reflects strengthening momentum and improving risk appetite, enhancing the likelihood of sustained upside for the index in the near term.

Following a breakout above the previous swing high, the trend appears very positive. This, coupled with a bullish crossover of the 20 EMA and 50 EMA, suggests a strong upward trend. The RSI on the daily timeframe has also broken out of its earlier consolidation range, indicating improving momentum. Overall, the technical chart setup points to a smart upward move in the short term.

In addition, 73% of Nifty 50 stocks are currently trading above their 50 EMA, a sharp improvement from 52% three days ago, which indicates strengthening breadth and improving sentiment in the large-cap space.

The trend is likely to remain strong in the near to short term, with a buy-on-dips strategy favoring the bulls as long as the index holds above 26,000. On the higher end, a decisive move above 26,350 could trigger an advance towards 26,600 in the short term.

The Bank Nifty has remained a clear outperformer relative to the Nifty over the past few sessions. A falling trendline breakout, along with a reclaim of key short-term moving averages, has acted as a tailwind for the index. The index has now entered a strong momentum zone, increasing the probability of a move towards 61,500 in the short term.

On the lower end, immediate support is placed at 59,500; a sustained move below this level could weaken the current trend.

Although the stock has fallen sharply and entered the oversold zone, buying at current levels appears risky. On the weekly chart, the stock has broken decisively below the 200-week EMA for the first time since March 2022, indicating an increase in long-term weakness. Therefore, instead of buying at current levels, a sell-on-rallies approach is recommended.

The stock has witnessed a strong rally during the current week following a breakout from consolidation. A buy-on-dips strategy offers a better opportunity to participate in the move. On the downside, the 20,000–20,200 zone may provide a favorable entry area, with a stop loss placed at 19,000. On the upside, the stock has the potential to move towards 24,000 in the near term.

After correcting during November–December, the stock has been witnessing renewed buying interest near recent lows. The RSI is in a bullish crossover and is indicating positive divergence. Sentiment is likely to improve further once the stock moves decisively above 750. On the upside, the stock may move towards 790, while on the downside, support is placed at 714.

The stock has been consolidating after a breakout and a strong rally, suggesting it may be preparing for the next sharp upmove. Additionally, the price has moved above the 21 EMA, with the 21 EMA and 50 EMA forming a bullish crossover. The daily RSI has delivered a clean breakout, indicating strengthening momentum. On the upside, the stock may move towards 345, while support is placed at 309 on the downside.

The price has moved above a recent consolidation zone on the daily timeframe, with the sharp price rise supported by strong volumes. The RSI is in a bullish crossover and continues to rise. Moreover, the stock is trading comfortably above its 200 DMA, confirming a long-term uptrend. The daily RSI has also witnessed a clean breakout. On the upside, the stock may move towards 1,400, while support is placed at 1,280 on the downside.