Avoid long positions until Nifty closes above 17990
MACD line below zero line showing the weakness; 50DMA now entered into a downtrend; RSI is near the bearish zone; All the short-term indicators are showing no strength
image for illustrative purpose
The equities witnessed a high volatile session before the weekly expiry. NSE Nifty closed at 17895.70 with an 18.45 points decline. The Nifty Metal index is the top gainer with just 0.75 per cent. Bank Nifty, FinNifty, and PSU bank indices gained over 0.50 per cent. The FMCG index is the top loser with 1.13 per cent. The Nifty Energy and Infra indices closed lower by over 0.50 per cent. The broader market breadth is at 1:1 as 959 advances and 945 declines.
Out of Nifty 50 stocks, 31 closed negative. Interestingly 28 stocks hit a new 52-week high, and another 28 stocks hit a new 52-week low. Seventy-one stocks traded in the upper circuit. Bharti Airtel, Reliance and ICICI Bank were the top trading counters today in terms of value.
The markets traded within the tight range and experienced higher volatility. With the negative breadth, the Nifty closed below the 100DMA again. It formed a long-legged small body candle, and it is a negative candle too. As it formed a lower high and lower low candle and failed to sustain intraday bounces, overall conditions are not showing any strength. Before the weekly expiry, the Open Interest declined, and the negative price closing shows the profit booking at higher levels. The volumes were lower than the previous day.
The index is below the moving average ribbon, with the MACD line below zero line showing the weakness. The 50DMA now entered into a downtrend. The RSI is near the bearish zone. All the short-term indicators are showing not any strength. For the last 10 hours, except for two hours, the Nifty mostly traded in the 17656-940 zone. During the day, the first two hours of trading are very volatile. On an hourly chart, the index faced resistance at the moving average ribbon. For now, the Nifty has close above the 17980 resistance, at least on an hourly basis, to gain strength and move higher. But a negative closing or a close below 17824 will be more negative and will increase the possibility of moving below 17774. It is better to be neutral to negative bias for now and avoid long positions unless it closes above 17990.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
