Bollinger Bands Clearly In Downtrend

The next immediate support is at 23,825pts, which is also 150DMA. It is also below the 20-wk average. As we forecasted on Thu, the Doji Candle failed to get confirmation of the reversal. Now, the index may meet the pattern target of 23651 in a week or two

Equities are under the bear grip. The most intense selling pressure with high volume and across the board was seen. NSE Nifty closed at 24,180.80 with 218.60 points or 0.90 per cent. The FMCG index gained by 0.88 per cent. The Pharma and Healthcare indices also advanced by 0.43 per cent and 0.02 per cent, respectively. The PSE and Oil and Gas indices were the top losers with over 2.5 per cent decline. The PSU Bank, Smallcap, Media, Energy, Commodities, Auto and CPSE indices are down by over two per cent. All other indices declined over half a per cent to two per cent. The India VIX is up by 4.74 per cent to 14.63. The market breadth is extremely negative as 2,292 declines and 519 advances. About 217 stocks hit a new 52-week low and 306 stocks traded in the lower circuit. IndusInd Bank, Dixon, Reliance, and HDFC Bank were the top trading counters in terms of value.

The benchmark index closed at its lowest level since August 6. On a monthly basis, the Nifty registered its sharpest decline after the Covid crash of March 2020. It declined by 6.73 per cent this month and 8.39 per cent from its all-time high. The market breadth is extremely negative. Barring FMCG, all the major sector indices declined by over 1-3 per cent. Now, the index is 3.77 per cent below the 50DMA. The Nifty registered another distribution day, as the selling pressure was with higher volume. Now, the index holds five distribution days, The Bollinger bands are clearly in the downtrend. The Nifty has met the 78.6 per cent extension target of head and shoulders pattern breakdown. The RSI entered into the oversold zone.

This major indicator may be sustained in the oversold zone for more time. The next immediate support is at 23,825 points, which is also 150DMA. It is also below the 20-week average. As we forecasted on Thursday, the Doji Candle failed to get confirmation of the reversal. Now, the index may meet the pattern target of 23,651 in a week or two. It is also equal to the 10 per cent correction level of the all-time high. The Midcap and Smallcap indices have already declined by over 10 per cent. Now, a majority of Nifty-500 stocks are below their 200DMA, and none of the stocks were in the buy zone. It is the time to protect the profits where possible. Stay away from fresh purchases, as the market condition has changed to a downtrend. Even the best earnings performance is helpful to the price. Wait for the benchmark index to form a base.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)