All Moving Averages Hovering In Downtrend

For a bullish bias, it must close above 23,560; 20DMA of 23,216 is the crucial resistance level. There are several resistances on the upside till 23,800-24,060 zone, in any case, if it closes below 22,557-350 zone of support, and the next target zone is 21,679-281

The equities traded volatile during the week. Large-cap stocks were the underperformers. The benchmark index, the Nifty, declined by 133.35 points or 0.58 per cent. The BSE Sensex is down by 0.83 per cent. The Nifty Midcap-100 and Smallap-100 advanced by 1.68 per cent and 1.49 per cent, respectively. The Microcap-250 is up by 0.11 per cent. On the sectoral front, the Metal and Energy indices gained by 5.16 per cent and 3.34 per cent, respectively. All other indices were declined. The Auto index is down by 2.05 per cent, and FMCG has declined by 1.96 per cent. The market breadth is mixed during the week. The India VIX is down by 3.23 per cent to 14.53. The FIIs sold Rs.36,976.70 crore, and the DIIs bought Rs.42,601.02 crore worth of equities this month.

After seven days of oscillation, the Nifty finally closed below 22800 with higher volume. It test-ed the low several times before closing below. It formed a long upper shadow, a small body can-dle on a weekly chart. The weekly volumes were lower. The 23000-23050 zone is acting as a strong supply zone. It failed to close above this resistance zone. The index registered the lowest closing after 6th June. The rally attempts efforts were failed. The index has formed a series of lower highs and lower lows. Unless it forms a higher high above 23807, the index is in a con-firmed downtrend.

The Nifty is trading below all short and long-term averages. It is 5.28 per cent below the 200DMA and 2.74 per cent below the 50DMA. The 200EMA is placed at 23560. For a bullish bias, the index must close above 23560, at least. For a short, the 20DMA of 23216 is the crucial resistance level.

There are several resistances on the upside till 23800-24060 zone. But, on the downside, the reasonably strong support is at 23350, which is another over two per cent away. Now, the Nifty took support at the April 2023 high of 22783.

In any case, the index closes below the 22557-350 zone of support, and the next target zone is 21679-281. As the index entered into the Category-2 correction, expect the next leg of fall will be a sharper one. The will complete the 17-19 per cent correction from the top. It is important for the price to form a base around this support zone of 22679-281. Expect counter-trend consolidations, which may indicate the future direction. In any case, the index fails to consolidate and reverse from here, except for the Cate-gory-2 correction target of 25 per cent from the top, which is at the 20200-19800 zone. The cur-rent bear market may end by May this year. Historically, the majority of the bear market ended in eight months. We are in the fifth month of correction.

The global markets sharply declined over the weekend. The Dow Jones index is down by 2.51 per cent, and the S&P is down by 1.66 per cent. Nasdaq declined by 2.26 per cent. The Gift Nif-ty is also down by 116 points. So, expect a gap-down opening on Monday. The first hour’s range will be crucial for the day. A bounce above the first hour high will be positive. If the Nifty closes negative on a weekly basis, expect the 22,281 level will be tested in the first week of March.

The weekly and daily RSI declined into the bearish zone. The MACD is also bearish in all time frames.

All the moving averages are in the downtrend. In this scenario, avoid long positions, and every bounce can be utilised as a selling opportunity. Avoid highly leveraged positions, as the monthly expiry is on the cards.

The Rollovers will indicate the directional bias for the next month. Stay highly selective on stocks.