Fresh Covid scare hits mkt; Nifty struggles to touch 15k

INCREASING Covid-19 cases, lockdowns, and night curfews are the fresh culprits in the market decline. Night curfew in Gujarat cities and probable restriction on restaurants, cinema halls in Maharashtra dampened the market's sentiments. After opening on a positive note, benchmark indices declined on the volatile session. The Nifty lost 19.05 points and settled at 14,910.45. The Bank nifty fell by 1.07 per cent. The Nifty IT saved the market from big declines as it went up by 1.27 per cent.

FMCG, Auto, Mid and Small caps rallied in today's market. India VIX went further down by 4.89 per cent. The overall market breadth was almost 1:1 as 1,009 declines and 884 advances were recorded. The Nifty future volume declined, and the open interest also declined by 3.94 per cent. But, the Nifty future closed with a 5.75 points gain. The range-bound trading with further higher Intraday swings may continue for some more days.

Sharp swings during the day have increased the uncertainty in the direction. It has become an extremely difficult Intraday basis now. For the one month, positional trades were unsuccessful because of gap openings. Today, the high tide swings in the shortest possible time also hurt the positions. The market once again closed below the open level and sustained below the 20DMA for the second day. It is trending further down. It failed to move above the prior day high. The ADX line further declined to below 15, which is an indication of weaker trend strength. Importantly, ADX is below the -DMI, and +DMI, which is a sign of a non-trending market.

On a daily chart, the RSI is at the 50 line, and any close below 48 will increase the probability breaking down of 50DMA. MACD histogram is also showing the increased bearish momentum. As mentioned earlier, the Nifty may test 50 DMA once again in the next two to three days. This critical support must be protected, otherwise market status may change to a downtrend. Unless Nifty closes above the 20 DMA, it is better to keep away from the long positions.

The positive openings have become selling opportunities in the past few days. After the first hour of trading, the Nifty made lower highs and lower lows on an intraday chart. In between, there are sharp swings on 3-minute time frames. As these swings are on both sides, the day traders faced challenges managing the positions.

(The author is a financial

journalist, technical analyst, family fund manager)