Charts Indicate Indecisiveness

As the Dollar index (DXY) and 10-year bond yields are rising, expect more pain in equi-ties. Nifty may not hold the 23,566 (50-wk avg) and the previous low of 23263. Below this, expect the index to test the 22,800-600 levels, which is a strong support zone

The equity indices closed positively after a sharp decline last week. NSE Nifty gained by 165.95 points or 0.70 per cent and closed at 23753.45. The India VIX tumbled by 10.30 per cent to 13.52. The Realty index gained by 1.47 per cent. The Bank Nifty and PSU Bank indices gained 1.10 per cent and 1.08 per cent, respectively. The Microcap-250 index is the top loser with 0.89 per cent, followed by Media with 0.39 per cent. The market breadth is negative as 1,704 declines and 1,130 advances. About 82 stocks hit a new 52-week low, and 113 stocks traded in the lower circuit. Amber, Intellect, Zomato, Mobikwik, and Swiggy were the top trad-ing counters, in terms of value.

The Nifty formed an inside bar on a volatile trading day. It also formed a small body candle, which shows indecisiveness about the directional move. The opening gains were not sustained until the end. The volume did not support the positive closing. The volumes were not even half the previous day, which shows traders are not interested in participating in a truncated week. It declined below the 200EMA during the but, able to sustain above it. But, it closed below the 200DMA. The 23568-692 zone will act as support for this week.

For directional bias, the index must close above Friday’s high of 24066 or below 23537. These levels are also crucial for this week. Interestingly, on a positive day, the market breadth is negative. Small and Microcap indi-ces suffered losses. This is an indication of weakening broader market strength. It is like a sell-on-rise market. As the Dollar index (DXY) and US 10-year bond yields are rising, expect more pain in the equities. The Nifty may not hold the 23,566 (50-week average) and the previous low of 23,263. A close below this zone, expect the index to test the 22,800-600 zone, which is a strong support zone. For now, it is time to stay on the sidelines or limit the portfolio to a minimal size.

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