Index Still Hovering Below 10-Wk Average

The equities took a breather after the previous day’s sharp decline. The Nifty gained by 91.85 points or 0.39 per cent. The Nifty Microcap-250 index is the top gainer with 2.22 per cent. The Oil and Gas index is up by 1.64 per cent. The Media, Smallcap, Energy, Metal and CPSE indices gained over one per cent. The Nifty IT index is down by 0.68 per cent. The Consumer Durables index is down by 0.27 per cent. The India VIX declined by 6.33 per cent. The market breadth is extremely positive as 2076 advances and 751 declines. About 71 stocks hit a new 52-week low, and 113 stocks traded in upper circuit. Mobikwik, Zomato, Aegis Logistics, Intellect, and ONGC were the top trading counters, in terms of value.

The Nifty has formed an inside bar, as the price traded in the previous day’s range. The price action is limited to the first hour’s range. The index has formed lower highs on an hourly chart. Though it moved above the 200EMA during the day, it struggled to close above it. The index also formed a long upper shadow candle, showing that the gains were not sustained till the end. It is able to hold the 50-week average support for the day. It is critical to hold this support to halt the further sharp fall. For an upside move, the index must close above the 10-week average. The only significant positive technical development is that the positive divergence in RSI is still valid. It must be sustained above 40 zones to avoid bearish bias. Though the volumes were lower than the previous day, the selling pressure is not present. The 24090-23665 zone is crucial now. As long as the index trades in this zone, stay neutral. Either side, a breakout will be result in impulse move again. The index may consolidate within this range for next two days. Watch current week’s close for future direction.

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