Bears set to dominate Nifty till Budget

The stock market lost its bullish streak. After December 21, the Nifty lost over 100 points. It lost 161.90 points and closed at 14433.70. The Banknifty also lost its ground by losing 278 points and confirmed the last two bearish candles. The volatility index India VIX has reached to the upper band once again.

It has crossed 24 after four months. All the sectoral indices ended up in the negative zone. Interestingly, all the indices fell by over one per cent. IT PSU Banks and PSE stocks were the worst hit today. IT index fell by 2.29 per cent, and CPSE index declined by 2.17 per cent. The market breadth was extremely negative today. As many as 1,345 stocks closed with losses, and only 547 stocks closed with gains.

Finally, as we expected, the Nifty declined and closed below the prior day low. For the first time it closed below 5EMA that started bending downside. It took support at 8EMA for the day. Unlike in recent times, the Nifty failed to recover from the lows. Opened on a flat note and gradually drifted down. In fact, the Nifty closed at four days low. Even the 8EMA also turned down.

The RSI was down by over 10 points to 70.83. It closed below the prior swing low. Though it does not have negative divergence, a close below the prior swing is definitely a negative factor.

On the 75-minute chart, the Nifty broke down double top pattern. 34EMA also turned down this time frame. The MACD histogram shows that the bearish momentum has increased. The negative directional movement indicator started rising.

In any case, on Monday the closing was below 14,405-14,357 zone. The bears will dominate till the General Budget. Only seven of the Nifty stocks closed in positive territory. Now avoid long positions stay in cash. Only below 14,350 will get a bearish confirmation.

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