Close below 15885 indicates bearish sign for Nifty
As index formed a long upper shadow candle, it is a negative for the market; as the expiry is in place, the volatility will increase further
image for illustrative purpose
The Nifty has almost replicated the previous day's move, except for the last hour's move. The Nifty declined by 51.10 points or 0.32 per cent. The Bank Nifty and Fin Nifty led the market to fall on Wednesday. The IT and FMCG indices are down by 1.29 per cent and 1.27 per cent, respectively. Auto, Metal, and Realty indices gained with a 0.25 per cent gain.
The VIX is up by 2.10 per cent. The market breadth is negative as 1220 declines and 822 advances. About 33 stocks hit a new 52-week low, and 86 stocks traded in the lower circuit. ONGC, Reliance and Axis Bank were the top trading counter on Wednesday in value terms.
Except for the last hour move, the Nifty has moved in a similar to the previous day. It opened with a gap down and filled the gap by moving higher. But, the last hour decline because of profit booking is the only difference. The benchmark index has made another lower high and lowers low candle. The 21EMA (15689) acted as resistance on Wednesday.
As the index has formed a long upper shadow candle, it is a negative for the market. It retraced almost 50 per cent of the day's upside move in the last hour. The index and broader market breadth were negative. The rollovers are still below the monthly, quarterly and six months averages. The distance between the price and 20DMA has increased.
This is an indication that bears are taking control of the market. The 50DMA is now 2.95 per cent away. For the last three days, the index failed close above the 38.2 per cent retracement level of 15885. On Monday, the index opened above this level, and the gap-up euphoria was fizzled out just in hours. As the expiry is in place, the volatility will increase further.
For the next month's contract, the PCR is at 1.28, which is near the strong bearish zone. The RSI is facing stiff resistance at the 46-47 zone. Only in case of RSI moves above 55 zone, will be a positive sign. Otherwise, be cautious approach with a smaller position size.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
