Any decline below 17052 (200DMA) will be negative for market

The benchmark indices closed higher for the second successive day. Indices traded subdued in the morning session, and with a sudden spurt, NSE Nifty closed 103.30 points or 0.60 per cent higher at 17326.30. The Nifty Pharma index is the top gainer with 1.54 per cent. Fin Nifty up by 1.01 per cent. The media index was down by 1.22 per cent, and FMCG, Auto indices closed flat. Most of the indices are higher by 0.50 per cent. The Volatility index is down by another 5.78 per cent. The market breadth is positive as 1215 advances and 874 declines. About 170 stocks traded in the lower circuit. Adani Power, AWL and BhartiAirtel were the top trading counters today.

The Nifty closed at the day's high and above the three-day range. Once again, the brisk activity was witnessed in the afternoon session. There was a sudden spurt in the market just because of index weightage adjustments and the NAV management. As we expected, the Nifty is still within the range of the 17000-350 zone. It tested the near resistance and sustained the gains. The future volume is much lower than the previous day. A hundred point move with a lower volume leads to some suspicion. After a bounce from the 200DMA support, the index is continued to trade above the short-term moving averages. But, the 50DMA is still in a downtrend. As we mentioned, the resistance zone of 17350-443 is crucial for the next two days. On Thursday, apart from the monthly derivatives expiry, it is also the last trading session of the month. To maintain the higher NAV for the various mutual fund schemes will rejig the portfolio, and the index management may continue for another two days.

A weekly close above 17328 is a big positive for the markets. Currently, the 200DMA is placed at 17052, and the 50DMA is at 17154. This zone will act as strong as possible support for the index now. As long as it trades above the 50DMA, be with a positive bias, and any decline below 17052 (200DMA) will be negative for the market. Do not expect this to happen in the next two days unless there is a sudden sell-off. At the same time, last week's low and high 17006-443 will also be a crucial zone. It is evident that the Nifty range has shrunk to 400 points. This indecisive, non-directional move, after an impulsive move, is common price action. As the index weightage is changing, we may see stock-specific activity for the next two days.

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