Bank, realty rescue volatile Nifty from big fall
image for illustrative purpose
Return of volatility to the screen. Another gap up opening, over 200 point fall and a hundred points recovery shows the intensity of emotions at the higher level. The short term, day trading, has become an extremely difficult task now. After a knee-jerk reaction on up and down moves, the Nifty finally closed with a decline of 53.25 points.
The buying support in the last shows that the bulls are still active at lower levels. Metal, Banks and Realty stocks protected the market from a big fall. The defensive sectors IT and FMCG fell over one per cent. The market breadth turned negative in favour of declines.
Interestingly, the Nifty breadth is positive in favour of advances. India VIX up by 2.61 per cent closed at 21 levels. As the volatility increasing, it is hard to find a comfortable trade on a short term basis. The Nifty witnessed a volatile session. As the weekly expiry is nearing and the index reached extreme overbought and overstretched conditions, the traders preferred to book partial profits.
After another gap up opening, the Nifty traded sideways in the morning session. With the sudden selling pressure at 1 pm, the Nifty drifted down and fell below the previous day's low. Once again, a 100 points from the lows of the day prevented the bearish engulfing or a negative impact on the direction. As we forecasted, the volatility at the higher levels is increasing and the momentum is clearly waning on the upside.
At one point of time, the Nifty fell sharply 200 points lower. This is the first sign of market is nervous while moving higher. Earlier, every dip is used for as buying opportunity, but, today it was against that recent habit. Nifty failed to move above the opening high and formed another bearish candle hanging man. It closed below the opening level after 21st December.
The Nifty looks like it ended the positive closing after ten days of positiveness. Though it closed in negative zone with a tiny 0.20 point dip, the higher high closings are intact. In any case, the Nifty closes below the 14,100-14,020 zone of support, and the negative divergence will emerge in RSI.
In such a case, the unabated uptrend may end till the General Budget. Any positive triggers in the budget will fuel the next leg of a market rally. Before the budget, the Nifty may oscillate between 14,250-13,600 zone. In this 650 points range, it may witness huge volatility.
(The author is a financial journalist, technical analyst, trainer, family fund manager)
