All Indicators Signal Bearish Momentum

The IT stocks rally did not help the market recovery. With an extreme negative breadth, all other sectors witnessed the selling pressure. NSE Nifty declined by 95 points or 0.4 per cent and closed at 23431.50. The Nifty IT index is the only gainer with 3.44 per cent. The Media index is the top loser with 3.59 per cent. The Realty, PSU Bank, and Small-cap indices are down by over 2.5 per cent. The Microcap, PSE, Healthcare, CPSE, Pharma, Midcap, and Energy indices declined over two per cent. The other indices registered 0.50 per cent to 2 per cent. The India VIX is up by 1.76 per cent to 14.91. The market breadth is extremely negative as 2287 declines and 551 advances. About 219 stocks hit a new 52-week low, and 181 stocks traded in the lower circuit.TCS, RKForge, ITI, Infosys, and HDFC Bank were the top trading counters in terms of value.

The Nifty has registered the lowest closing after 13th June. It formed another minor low and closed below the previous low. It escaped the distribution day, as the volumes were lower than the previous day. The index is decisively below all long-term averages. On a weekly front, the volumes were higher than the previous week. The index closed below the 50-week average on a weekly closing basis. The next meaningful support is at the prior low of 23,263. The weekly MACD also declined below the zero line, which is a strong bearish signal. The weekly RSI is about to shift its range into the bearish zone. All indicators are showing a strong bearish momentum in all time frames. For the last six days, the high volume of bearish bars is an indication of serious distribution. The 200EMA enters into a downtrend. The 50DMA is about to cross under the 200DMA, which is further negative and results in a death cross. Other than TCS, the other companies have announced poor earnings. The more poor earnings mean, the more pain in the market. It is the time to trim the portfolio and avoid building portfolios.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)