Caution to investors as momentum turns negative

The market traded in a subdued manner as buying interest was very limited. The benchmark indices traded in a tight range and failed to close in above the prior day. The Nifty closed at 15740.10 points with a marginal loss of 11.55 points. The Bank Nifty down by 1.01 per cent and the Fin Nifty declined by 0.96 per cent. Nifty IT protected the market from a bigger loss with a 1.2 per cent gain. Pharma and FMCG indices ended with 0.84 per cent gain. Mid-cap and Small-cap indices up by 0.55 per cent. The market breadth is positive as 1051 advances and 880 declines. 209 stocks hit the upper circuit, and 262 are reached their new 52 weeks high. India VIX is further declined by 2.2 per cent.

Our suspicion about the limited upside realising slowly. Another hanging formed today. Six hanging man candle in a row is a rare phenomenon. These formations are not good signs in normal times. The sector rotation and the liquidity push are the key factors for the market to sustain at the top. As the momentum is declining, the Nifty is struggling to make a decisive move. The prolonged linear trend reached a matured stage. The index traded in the first hour's range. The recovery from the first hour low is not a significant one and failed to make a new high close.

A close below 15700-680 will signal a fresh downswing. At the same time, if the index fails to make another high and closes below the 15700, the next level of immediate support is placed at 15498. On 75 minutes chart, the momentum turned negative and the divergence in RSI still a concern. Currently, the market may witness a subdued trend in the indices, and stock-specific action will continue. The IT and Pharma stocks will outperform the broader market. Midcaps from these sectors will attract a new buying interest.

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