Charts indicate selling pressure at higher levels
Stay away from long positions; On downside, below 22,500, next reasonable support is at 22,350-250 zone
image for illustrative purpose
The equities tried to consolidate within the range and the benchmark index closed flat to negative. NSE Nifty is down by just 5.80 points and closed at 22,547.55. The Media, Consumption, Consumer Durable and Auto indices have gained by over 0.50 per cent. The Metal, Realty, PSU Bank, and Oil and Gas indices are down by 1-1.54 per cent. The PSE, Commodities, IT, Microcap, and CPSE indices are down by over 0.75 per cent. The India VIX declined by 5.04 per cent to 13.71. The market breadth is negative as 1,717 declines and 1,117 advances. About 186 stocks hit a new 52-week low, and 101 stocks traded in the upper circuit.
HDFC Bank, TCS, Reliance, M&M, and ICICI Bank were the top trading counters in terms of value.
The Nifty traded in a range after the previous day’s big decline. In a 109-point range, the index has formed a long upper shadow candle, which indicates the selling pressure at the higher levels. It has formed a lower low and lower high candle. The only positive aspect is it formed an open low candle. Normally, it is a bullish candle, but the index failed to sustain at the higher levels. The index breadth is negative, and the Reliance and TCS dragged the index down. On a flat closing day, the volumes were a little higher than the previous day. The RSI is flattened, and the MACD shows a further increase in the bearish momentum. The Open Interest data shows fresh shorts were built up. The FIIs also increased their short positions in the index. Interestingly, the Implied Volatility collapsed to the 8.42 level, the lowest in recent times. The India VIX is also down by over five per cent. So, expect a spike in volatility. For now, the index must fill the Monday’s gap area for a reversal on the upside. On the downside the below 22,500, the next reasonable support is at 22,350-250 zone. Stay away from the long positions.
(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)
