Charts indicate caution alert

The rise in indices with negative news did not sustain by the end of the day. NSE Nifty has given up most of the gains. It finally ended up with just 29.45 points or 0.15 per cent and closed at 19413.75. The Nifty IT index is the top gainer with 1.75 per cent. FinNifty and Metal indices are also up by 0.49 per cent and 0.26 per cent, respectively. The PSU Bank index is the top loser with 2.38 per cent. The Nifty Energy is down by 1.43 per cent, and the Auto index is also down by 0.61. The India VIX closed flat at 10.94. The market breadth is negative as the advance-decline ratio is at 0.61. About 166 stocks hit a new 52-week high, and 58 stocks traded in the lower circuit. HDFC Bank, ICICI Bank, and Reliance were the top trading counters on Thursday in terms of value.

The most bullish morning session turned into a bearish one by the evening. The Nifty has formed another new all-time high today, with all sectors and broader market participation in the morning session. The above-average volume indicates the distribution at the higher levels. But, the selling pressure in PSU Banks triggered the overall profit booking at higher levels. The selling pressure first began in PSU Banks and spread into other sectors. The Nifty declined by 181 points from the day’s high. Even the Reliance lost its strength in the afternoon session. The Nifty IT index was strong and protected from a bigger fall. The Bank Nifty slipped over 470 points from the day’s high.

Technically, the Anchored VWAP acted as support for the day. Even the monthly VWAP also acted as support today. After the first hour of the trading, the index has formed all lower high candles. The index again closed at the hourly moving average ribbon lower band. The Hourly MACD has given a fresh sell signal. Even though the Nifty has formed a higher low candle, it failed to close above the previous day’s high. A fresh negative divergence has developed in RSI, as the price formed a new high, but the indicator failed to do so. The Daily MACD line is further closer to the signal line, and the histogram may move below the zero line at any time. As the index failed close at a new all-time high, Friday’s inside bar implications are still valid. In any case, if the Nifty closes below 19,303 points, it will be negative. On a weekly chart, the index forms a perfect Doji candle as of now. On the upside, it must close above 19,524 points for an uptrend to continue. As we expected, the intraday volatility has increased. Stay cautious on weekends.

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