18155-225 zone may act as resistance

Equity market traded sideways and closed almost flat a day before the monthly derivatives expiry. The frontline index Nifty ended at 18122.50 with just 9.80 points decline. None of the sectoral indices gained or lost more than a per cent. The top gainer is the Nifty Media index with 0.62 per cent, and the top loser is the Nifty Pharma index with 0.56 per cent. All other indices registered less than half per cent move. The market breadth is positive as 1109 advances and 813 declines. But the Nifty-50 breadth is negative as 29 stocks declined. About 22 stocks touched a new 52-week high, and 126 stocks traded in the upper circuit. Reliance, Yes Bank, and IOB were the top trading counters today in terms of value.

NSE Nifty settled below the 8EMA on a flat note. The index is able to protect the last Friday's low for the third successive day. It formed three higher high candles. After opening with a flat to negative note, the index traded in just 105 points range. The last two day's strong move looks matured. The Long upper shadow and the selling in the late afternoon session hint that the trend is exhausting. Closing below the prior bar low on an hourly chart is another indication of exhaustion. It failed to close above the 8EMA and 38.2 per cent retracement level of the prior lower swing. As mentioned earlier, the technical pullback is normal after a sharp decline. After two days of strong pullback, the daily trading range shrunk to a minimal. The Elder impulse system has not yet formed a bullish bar. Volumes recorded lowest. There are no divergences visible now. Before the expiry day, the rollover activity was slowed a bit. Rollovers were at 55.4 per cent, a bit lower than the three-month average (57.62 per cent). For the next two days, the 18155-225 zone will act as resistance. Above this zone, the recovery will continue. But a move below today's low of 18068 will be negative, and a close below this level will resume the downtrend. Traded cautiously for expiry day.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)