Charts Indicate Indecisiveness

Dalal Street witnessed another dull trading day as NSE Nifty closed at 23,750.20 with 22.55 points or 0.10 per cent gain. The Auto and Healthcare indices were the top gainers, with 0.84 per cent and 0.78 per cent, respectively. The Bank Nifty, Pharma, and PSE indices gained by over 0.50 per cent. On the flipside, the Media is the top loser with 1.46 per cent. The Microcap-250 index is down by 0.72 per cent. All other indices were subdued. The India VIX is up by 6.51 per cent to 14.03. The market breadth is negative as 1,594 declines and 1,221 advances. About 67 stocks hit a new 52-week low, and 88 stocks traded in the upper circuit. Mobikwik, Amber, Intellect, Mazdock, and Reliance were the top trading counters in terms of value.

The Nifty struck between 200DMA and 200EMA. It has been trading within last Friday’s range and forming the inside bars for the last three days. The volumes were very low as the Christmas and New Year holiday mood gripped the market. The index has formed a long-legged small body candle in the last three days, showing indecisiveness about moving directionally. It moved in just 222.35 points range this week, and the volumes were not even 30 per cent of the last week. It is trading 2.07 per cent below the 50DMA, and both 20 and 50DMAs are in the downtrend.

The 100DMA enters the downtrend. On a weekly chart, after a big bearish candle, the index formed a small doji candle within the last week’s range. The 200DMA has been acting as a resistance, and the 200EMA has been acting as support for the last three days. Currently, the Nifty is trading 2.10 per cent above the recent low of 23,263. It failed to close above the 23.6 per cent retracement level of the recent downswing. A close above 23,834 and 23,855 will be positive for the short term. But for a decisive upside move, the Nifty must close above Friday’s high of 24,066. Above this, it may test the 24,165 and the 20 DMA of 24,290.

On the downside, a decisive close below 200EMA of 23,693 will be negative, and it can decline below Friday’s low of 23,537. The RSI is below 30 and in the bearish zone. The MACD is below the zero line and bearish. For now, the index is no trade zone, as it struck within the range. This sideways move may continue for next week. Expect a directional move out of Friday’s range. Be with a neutral stance.

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