Hourly MACD Signals Bearish Bias

The equity indices traded subdued after a massive rally. The Nifty gained 41.70 points or 0.17 per cent and closed at 24167.25. The Realty index is the top gainer with 2.42 per cent. The FMCG and Consumer Durables gained by 1.89 per cent and 1.50 per cent, respectively. The Healthcare, Midcap, PSU bank, Smallcap, FinNifty and Banknifty gained by over 0.50 per cent. The IT, and CPSE indices declined by 0.57 per cent, and 0.51 per cent, respectively. The India VIX is down by 1.84 per cent to 15.23. The market breadth is positive as 1832 advances and 1059 declines. About 71 stocks hit a new 52-week high, and 155 stocks traded in the upper circuit. HDFC Bank, ICICI Bank, BSE, SBIN, and IndusInd Bank were the top trading counters today, in terms of value.

The Nifty finally loses momentum and looks tired after a massive sprint. Though it has not closed negatively, the Doji candle shows an indecision to move higher. For now, only a close above session’s high of 24243 will resume the upside. But a close below today’s low of 24072 will signal counter-trend consolidation. As mentioned earlier, the impulse moves generally correct at least 38.2 per cent of the prior rally, which is at 23288. The 20DMA is also at a similar level at 223297. If the fall extends, it may fill the 15th April Gap area by testing the 50 DMA. Expect the consolidation Gap area as the apex point of the probable ending triangle. The 24242.60 looks like a short-term top. On Tuesday, it formed a higher high at 24242.60. The Nifty has already retraced more than 50 per cent of the decline in the last eight months. It rallied 11.49 per cent in nine days. The RSI is forming a negative divergence on a daily chart. If the RSI fails to move above 72, the decline is imminent. The hourly MACD has given bearish signal. Avoid taking long positions. A close below session’s low will open the fresh short positions. Expect the consolidation for next two months in the last nine range. Focus on making new high stocks, in this consolidation.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)