Fatigued Nifty shows signs of negative closures
NSE Nifty briefly crosses 15K mark to fall below day’s opening
image for illustrative purpose
THE leadership from SBI lifted the market to a new high. Benchmark indices moved higher for the fifth consecutive day. The Nifty was up by 28.60 points and closed at 14,924.25. As we expected, the Nifty crossed the psychological level of 15,000. It fell 90 points from the day's high. The RBI monetary policy did not show any impact and became a non-event.
The Banknifty fell by 1,000 points from the day's high and closed with a net gain of 309.7 points. The Nifty Auto index fell by 1.09 per cent and Media index down by 4.47 per cent. PSU bank index was up by 3.60 per cent. Nifty IT index also went down by 0.93 per cent. Volatility index India VIX closed at 23.42.
The Nifty PCR was at a higher level at 1.62. After many days the market breadth is negative as 1,127 declined and only 747 advanced. As many as 350 stocks remained unchanged. Profit booking was seen in many frontline stocks.
The Nifty gained by 10 per cent during the week. The Union Budget is the key driver for the market to move to a new peak. The Nifty continued its positive closing streak all five days during the last week. It formed a morning star doji on a daily chart. Only in case of opening and closing in the negative zone on Monday will have negative implications. It is only giving exhaustion signs, but not bearish confirmations. On a 75 minutes chart, there is a negative divergence in MACD histogram, which is more valid than any other divergence.
Even in the RSI it is showing a negative divergence. These all are signs of tiredness in the rally. Even though the price is moving higher, the momentum is not matching with the speed of the price is another indication of drained energy. The Banks, particularly SBI kept the market on top. The breadth in Nifty is negative as 28 stocks closed with losses. A majority of derivative segment stocks was in a negative zone with increased open interest, shows that the shorts were built up in several stocks. Even in the Banknifty, only four stocks closed with gains. Three heavyweights in the index, SBI, Kotak Bank and HDFC Bank protected the market from a negative closing. As the Nifty failed to close above the opening level, the first time during the week and a doji candle gave a caution signal or fatigue.
(The author is a financial journalist, technical analyst, trainer, family fund manager)
