15735-16400 range likely for next 4 sessions
Broader market weakness induces a strong selling pressure; The base breakdown is not possible in the next 2 days, it may form another parallel candle
image for illustrative purpose
The domestic stock market declined for a third consecutive day. The Nifty closed with 99.35 points or 0.62 per cent and settled at 16025.80. In fact, it declined over 200 points from the day's high. The Bank Nifty and Fin Nifty are able to close in flat to a positive note. The Nifty IT index declined the most by 3.38 per cent. Realty and Media indices are down by 2.8 per cent each. The other sector indices closed with 0.5 to 1.5 per cent. The VIX closed at 25.28 with just a 1.38 per cent decline. The market breadth is extremely negative as 1758 declines and 322 advances. The Nifty500 breadth is also negative as 427 stocks declined. About 148 stocks hit a new 52 week low, and 216 stocks traded in the lower circuit. Reliance, Infosys, and Kotak Bank were the top trading counter by value Wednesday.
The Nifty closed below the prior day's low for the second consecutive day. Even a small recovery effort in the late afternoon was also used for selling opportunities. The Nifty has formed a strong bearish bar in the last three days. A positive opening was not sustained for a long period, and it closed at the day's low. It also closed the lower side of the base. The nine days of consolidation have more bearish bias than bullish. Unlike last week, the volatility is on the lower side this week.
On a 75 minutes chart, the moving average ribbon is entered into a downtrend along, with the MACD below the zero line. The RSI flattened on a daily chart. The previous week's two strong bullish candles have not shown any positive impact on the direction. Opening on a positive note and ending with big losses has become a common phenomenon recently. The base breakdown is not possible in the next two days; it may form another parallel candle. The Nifty will move in the range of 15735-16400 for another four days unless there is a serious decline. The broader market weakness is the main worry for now.
The Midcap-100 and Smallcap-100 declined sharply today with larger selling pressure. In Smallcap, hardly six stocks are able to close with tiny gains. These two indices are already reached near the prior swing low.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
