Avoid Aggressive Leveraged Positions

The equity indices failed to sustain a positive trend and ended a two-day winning streak. The Nifty declined by 126 points, or 0.51 per cent, to 24340.85. FinNifty was the top loser with 1.32 per det. The Consumer Durable, Healthcare, and Service indices are down by over a per cent. On the positive side, the Media index was up by 2.34 per cent, followed by the Smallcap index by 1.05 per cent. The other sectoral and thematic indices gained or lost by less than a per cent. The India VIX is up by 6.85 per cent. The market breadth is positive as 2092 advances and 686 declines. About 56 stocks hit a new 52-week high, and 234 stocks traded in the lower circuit. HDFC Bank, ICICI Bank, Maruti, and Reliance were the top trading counters in terms of value.

The Nifty erased all the previous day’s gains and failed to break out of an hourly double-bottom pattern as we expected yesterday. The Index has formed a shooting star candle, which is bearish. As stated earlier, it is important to close above 24493 to resume the upside move. The only positive thing is that it formed a third successive higher low. The index escaped the distribution day as the volumes were lower than the previous day. It closed below the hourly moving average ribbon, and the MACD is below the zero line. The Nifty faced resistance at 8EMA another day. The daily RSI failed to move above the 40 and enter into the neutral zone. As expected, the trading range was limited to 363 points in the last three days. The monthly derivative expiry may cause a further increase in volatility. The Bollinger bands squeeze will continue for another week. The next three to five trading sessions are crucial for a directional bias. The index may continue further above 24074, with a rangebound price action. Stay neutral in the 24074-24500 zone. Avoid aggressive leveraged positions.

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