Contracting Bollinger band signals possible consolidation

In case the index declines below 24,311 on a closing basis, it is negative and will give a reversal signal. The 24,074 is a crucial support zone, a weekly close below this will give a reversal signal. For an upside, the Index must close above 24,582 points, with volume support

Negative Market Breadth:

• 1,515 declines
• 1,177 advances
• India VIX has collapsed
• 150 stocks in lower circuit
• 85 stocks hit a new 52-wk high
• RSI is very near the neutral zone
• MACD shows rising bearish momentum

On a Union Budget day, the equity market traded with high volatility. The benchmark indices declined sharply as soon as the Finance Minister proposed the LTCG, STCG, and STT hike. The Nifty is down by just 30.20 points or 0.12 per cent and closed at 24,479.05 points. FMCG index is the top gainer with 2.68 per cent. ITC, Titan, and Hindustan Unilever led the market recovery. The Consumer Durable index is up by 2.11 per cent. The Nifty IT and Pharma indices gained by 0.68 per cent and 0.55 per cent, respectively. Nifty Auto index was also able to close with a 0.28 per cent gain. The Realty index declined by 2.29 per cent and is the top loser. The PSU Bank and PSE indices are down by 1.40 per cent each. FinNifty, Oil and Gas, and CPSE indices are down by over a per cent.

All other sector indices were down by less than a per cent. India VIX has collapsed by 17.43 per cent to 12.74, as the event risk is over. The market breadth is negative as 1,515 declines and 1,177 advances. About 85 stocks hit a new 52-week high, and 150 stocks traded in the lower circuit. HDFC Bank, HAL, RVNL, and IRFC were the top trading counters on Tuesday in terms of value.

Nifty traded in the 508.35 points or 2.07 per cent range on the Budget day. There are several tax proposals that are negative for the equity markets. Nifty closed below the 8EMA for the second day. The index recovered almost 400 points from the day’s low. The volumes were recorded highest after June 27, but escaped the distribution day, as the index fall is limited to 0.12 per cent.

Bollinger band began to contract, which is an indication of probable consolidation. In case the index declines below the 20DMA of 24,311 on a closing basis, it is negative and will give a reversal signal. The 24,141 and Tuesday’s low of 24,074 is a crucial support zone. A weekly close below this zone will give a reversal signal. The MACD Histogram shows a further increase in the bearish momentum. The RSI is very near the neutral zone as it is declining from the strong bullish zone. For an upside, the Index must close above Tuesday’s high of 24,582 points, with volume support.