Charts indicate bearish bias
Nifty has formed another new lifetime high, but was not sustained at the higher levels; It formed an open high candle, which is bearish
As long as the index trades above the previous day’s low, the trend is not dangerous. The support is now at 23905. Only a close below this level will be bearish, and it can test the 23700 zone of strong support. The volume decline is not a good sign, particularly at the new high
Equities closed flat with stop-specific activity. NSE Nifty is down by just 18.10 points, or 0. 07 per cent, and closed at 24,123.85 points. The IT sector rallied by 1.17 per cent and protected the benchmark from a bigger fall. The Realty gained by 0.83 per cent. The CPSE and Energy indices are up by 0.40 per cent and 0.35 per cent. The PSU Bank was the top loser with 1.81 per cent. The Private sector bank index and FMCG were down by 0.88 per cent and 0.85 per cent, respectively. The Midcap, Bank Nifty, Auto, and Consumption indices are down by over half a per cent.
The India VIX has also declined by 1.37 per cent to 13.64. The market breadth is slightly positive as 1,401 advances and 1,302 declines. About 231 stocks hit a new 52-week high, and 165 stocks traded in the upper circuit. HDFC Bank, JK Paper, ICICI Bank, and L&T were the top trading counters in terms of value.
The benchmark index has formed another new lifetime high, but was not sustained at the higher levels. It formed an open high candle, which is bearish. On a negative day, the volumes were higher than the previous day. As the index declined just 0.07 per cent, it escaped the distribution day. It formed lower highs on the hourly chart. The hourly RSI entered into the neutral zone and almost got the confirmation for its implications, and the MACD is bearish. These are the only weaker signals, but not the bearish signs.
As long as the index trades above the previous day’s low, the trend is not dangerous. The 8EMA support is now at 23,905 points. Only a close below this level will be bearish, and it can test the 23,700 zone of strong support. The 20DMA is at 23,445 points, which is very strong support for now. The volume decline is not a good sign, particularly at the new high. For an upside, the index must close above Tuesday’s level of 24,235 points, and it can test the 26,000 points. Only IT and Energy indices were above closed in positive bias. Stay cautiously positive for now.
(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)