Indicators Signal Strong Selling Pressure

The market failed to sustain the opening positive bias and declined sharply below support. NSE Nifty was down by 168.50 points or 0.71 per cent and closed at 23,644.90. The Healthcare index is the top gainer with 1.32 per cent, followed by the Pharma index with 1.01 per cent. The IT and Midcap indices are up by 0.57 per cent and 0.37 per cent. On the flipside, the Media index is down by 1.87 per cent.

The Realty, PSE, Auto, CPSE, Metal and PSU Bank indices declined by over 1 -1.5 per cent. The India VIX is up by 5.55 per cent to 13.97. The market breadth is negative as 1,913 declines and 947 advances. About 97 stocks hit new 52-week lows, and 122 stocks traded in the lower circuit. Zomato, Greaves Cotton, Mobikwik, ITI, and Adani Enterprises are the top trading counters in terms of value.

The Nifty declined sharply in the afternoon session and closed below last week’s low. It registered a distribution day, as the volumes were much higher than the previous day and last week as well. The index also tested the 50-week average again and closed below the 200EMA. With this session’s fall, the index is decisively below the 200DMA. It is 0.96 per cent below the 200DMA and 2.33 per cent below the 50DMA. The index also tested the rising trendline support, which is crucial for now. The price pattern for the last five days is like a bearish flag. If it closes below the 23,599 or 23,610 zone of support, it will resume the downtrend in an impulsive manner. The RSI is back in the bearish zone.

The MACD shows muted momentum. As stated earlier, the prolonged indecisive and narrow range will lead to impulsive moves. The index is now out of last week’s indecisive moves, and we can expect it will move sharper this week. This session’s move is almost equivalent to the last week’s move. The volume also indicates strong selling pressure. To resume an upside move, first, it must close above the 200DMA of 23,867. The broader market is also weakened as the breadth is negative. Avoid taking a long position now.

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