Bear pressure increasing on Nifty

THE broad-based sell-off forced the benchmark and the sectoral indices to close in negative over a per cent loss on the second straight day. The Nifty lost 152.40 points and closed at 14,281.30. The Nifty Bank was also down by 1.35 per cent. All the sectoral indices lost the ground. The Nifty Metal index lost the most by 4.08 per cent. Pharma index down by 2.77 per cent and the Auto index declined by 2.13 per cent. Almost all the sectoral indices declined over one per cent today. The overall market breadth is very negative in favour of declines.

A many as 1,512 stocks declined, and just 420 stocks closed in positive territory. Interestingly, the Nifty futures ended with a 30 points discount. Only six of Nifty 50 stocks closed with gains, showing the weakness present in the market. The Nifty closed below the previous day low and formed most bearish candle. After October 29, it closed in the negative zone for the second consecutive day. At the same time, it also fell over one per cent for the second day. It also closed below the 8EMA. Now both short term averages 5 and 8 EMAs are trending down.

As we suggested and kept mentioning, the market has very limited upside potential before the Budget, and it will enter into a counter consolidation. The support zone is coming closer. The 20DMA and the channel support is currently placed at 14,090. These supports are just 1.35 per cent away.The Anchored VWAP support is also at 14,076. The minor swing low support is at 13,953. All the indicators came down from the overbought zone. The RSI is just 6 points away from a major swing low. The MACD line has moved below the signal line and has given a sell signal.

The negative movement indicator-DMI moved further up indicating the bear's domination. Even the ADX declined and indicated the declining strength in the trend. The Stochastic oscillator drifted down to the bearish zone. Pring's KST was also given the sell signal. All the technical parameters are suggesting a bearish view and the important support zone for the market is now at 13,953-14,090 zone. In any case, the Nifty closes below these supports, the major support is at 13,491 (50DMA). On the upside, a close above the prior bar high of 14,459 is positive.

The volatility increased again. India VIX crossed 25 on an intraday basis. All the technical parameters are indicating that the market is entering into a counter consolidation. There are very remote chances of moving towards a new lifetime high. Avoid long positions now and apply bearish strategies with hedging.

(The author is a financial journalist, technical analyst, trainer, family fund manager)