Benchmark Nifty Hovering In Indecisive Zone

On a weekly expiry day, Nifty traded sideways and closed flat to negative. It registered small losses for the third straight day. The Nifty finally closed at 22913.15 with 19.75 points or 0.09 per cent decline. The CPSE and PSE indices were the top gainers with 2.23 per cent, and 2.15 per cent, respectively. The Metal, Energy, PSU Bank, and Commodities indices gained over 1.5 per cent. The FinNifty declined by 0.75 per cent, and Banknifty was down by 0.75 per cent. The India VIX is down by 4.78 per cent to 14.68. The market breadth is positive as 1996 stocks have advanced and 830 declined. About 106 stocks hit a new 52-week low, and 201 stocks traded in the upper circuit. BSE, HDFC Bank, PPL Pharma, TCS, and M&M were the top trading counters, in terms of value.

For the fifth day, Nifty oscillated around the 22,900-800 zone and failed to give a directional move. The volumes were lacklustre for the fourth day, but a little higher than the previous day. The Index has formed an open low candle and traded in a tight range during the session. The near 23,000 zone has become a supply zone, and 22,800 is the demand zone for now. A decisive breakout on either side will give a directional bias. The index is trading below all short and long-term averages. As long as it trades above 22800, it is better to avoid fresh short positions. The mid, small, and microcap stocks are coming out of an oversold zone, and the broader market breadth turned out to be positive for the second day. The RSI is in the bearish zone and failed to move above the 40 zone even on an intraday basis.

The index formed a bull candle but a lower high lower low candle. It is the time to be patient for a directional move. This kind of tight-range breakout will give a strong directional move. So, the 22,800-23,050 range breakout will give a directional bias on either side. A downside breakout will result in a sharp decline and can be tested at the 22,350 level. A decisive close with high volume above 23,050 will be positive, and 22,250 will be the immediate resistance. As we are entering into the expiry week, the volatility will increase. Stay calm on side lines and wait for breakout.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)