Intermittent spikes on monthly expiry

The stock market tumbled with fresh, intensified selling pressure across the broad. NSE Nifty declined sharply by 272.40 points or 1.53 per cent and closed at 17554.30 points. Only Pharma and FMCG indices were outperformed with just a 0.23 per cent 0.31 per cent decline. The Metal index is the top loser with 2.64 per cent. All other sectoral indices were down by 1.1 per cent to 1.91 per cent. As we expected, the India VIX surged by 11.2 per cent at 15.59, which caused the declining market. The broader market breadth is extremely negative as 1595 declines and 349 advances. The advance-decline ratio is just at 0.28. About 203 stocks hit a new 52-week low, and 84 stocks traded in the lower circuit. Adani Enterprises, Reliance, and ICICI Bank were the top trading counters on Wednesday.

The Nifty declined sharply and closed below the 200EMA. Earlier, from 27th January to 2nd February, it declined below this crucial 200 EMA, but failed close below the average. Today, it decisively closed below 200EMA, indicating that a long-term bullish strength has completely vanished. The Budget day low (17353) and the 200 SMA (17355) are the last hope for the market. In fact, it is already below the Budget day close. Most importantly, the Index is closed at the very crucial rising trendline support, which is drawn by connecting March 2020 low and June 2022 low. It is already declined below the previous two-week low. All short and medium-term moving averages are in the downtrend. The MACD has given a fresh sell signal. RSI declined below the 40 zone and entered the strong bearish zone.

During the last five trading sessions, the Nifty declined by 605 points or 3.34 per cent from its high. Now, a meaningful rise above 18000, where the 50DMA (17986) is also placed, and a channel resistance line, can be considered as a reversal on the upside. But it has to make a higher high by closing above the 18134-265 swing highs. For now, the only hope is 17355 support. A monthly close below 17405 will confirm the strong bearish grip is tightening. Be selective in this market. As monthly expiry is on the cards, there may be intermittent spikes, and any rise will give fresh shorting opportunities.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)