Expect volatile move ahead of expiry

The market witnessed a sharp pullback with the help of metal stocks. The Nifty declined below 15,550 points, but able to close above 15,700 points.The Nifty finally declined 37.05 points and closed at 15,709.40 points. The metal index is up by 1.22 per cent, and IT index is advanced by 0.21. All the other indices closed in less than one per cent. The market breadth is negative as 1192 declines and 733 advances. About 148 stocks hit new 52-week high, and 149 stocks traded in the lower circuit. For the fourth time declined below 15,630 points and recovered sharply, and for the second time, the Nifty tested the 23.6 retracement level of the prior uptrend.

Wednesday's move is an identical of 18th June. The Nifty closed above the 50DMA has not given any confirmation to the bears. As the buying support from the lower shows that the market is not in a mood to fall. The index is below the 20DMA for the second day. The market is becoming more and more nervous about the future. For the past two weeks, the Nifty is hovering around the 50DMA. The negative divergences are continuing in major indicators in all time frames. A 195 points recovery from the day's low and 255 points intraday move has not changed the market structure. This consolidation is already 30 days old.

We can assume that the consolidation is at the matured stage. The lower end of the consolidation is exactly at 50DMA at 15,664 points. The parallels supports are at 15,632 points. The Nifty broke this line of control four times, but not closed below it. Now, a close below this level will be the first sign of the market made an intermediate top. The Nifty extended 172 per cent of the 2020 sharp fall. The 161.8 per cent retracement level is at 15,470 points. The prior pivot point is at 15431. In any case, the Nifty breaches the 15,635 support; the next level of support is at 15,470-15,431 points. A decisive close below this level is a clear trend reversal signal. As the July expiry is in place, expect a volatile move.

(The author is financial journalist, technical analyst, family fund manager)