The last ten days’ price structure is definitely showing exhaustion by Nifty

Negative Market Breadth :

• 1457 declines
• 1204 advances
• 99 stocks in upper circuit
• India VIX down by 1.24%
• 197 stocks hit a new 52-wk high

Equities experienced a profit booking on the weekend. The Nifty declined by 65.90 points, or 0.28 per cent, and closed at 23,501.10. Only the Nifty IT and Consumer Durable indices were positive, with 0.76 per cent and 0.75 per cent rise respectively.

The FMCG, PSU Bank, and Oil and Gas indices were the top losers, with 1.07 per cent to 1.20 per cent in negative zone. A majority of sectoral indices closed with more than half a per cent decline. The India VIX is also down by 1.24 per cent to 13.18. The market breadth is negative as 1457 declined and 1204 advanced. About 197 stocks hit a new 52-week high, and 99 stocks traded in the upper circuit. ICICI Bank, Bharti Airtel, Reliance, and HDFC Bank were the top trading counters on Friday, in terms of value.

In a truncated, four-session week, the range shrunk to 268.90 points and finally closed with just 35.50 points gain on a weekly basis. The week opened with a 105.2-point gap, but it did not sustain at the higher levels. In the last ten days, Nifty closed below the opening level.

The Index has formed an evening star Doji or spinning top candle.

After nine days, the Nifty has tested the 8 EMA with short-term support. In a sideways to volatile week, the index closed above the previous week’s high.

The Nifty has formed three all-time highs in the last four trading sessions. The interesting point is that the volumes highest in the last ten days added the first distribution day at the lifetime high. As stated earlier, the index has not given any decisive weaker signal; the last ten days’ price structure is definitely showing exhaustion. Friday’s high-volume decline and engulfing candle is not a good sign. It also covered the whole week’s price action.

Forming a lower low and failing to close at the higher level are also not good signs. In this scenario, stay cautious on the bullish bias. In any case, if it closes below 23411, it will be negative and can test 23061. On the upside, the target is limited to 23770. Better to protect the profits on the table.

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