Keep short positions with 200DMA as stop loss
Nifty declined for the 8th straight session and formed the 9th consecutive bearish candle. It closed below 200DMA and formed another lower low and lower high bar
image for illustrative purpose
The market declined for the eighth straight session. NSE Nifty fell by 88.75 points or 0.51 per cent and closed at 17303.95 points. The Nifty Pharma and Energy indices were the top losers, with 1.31 per cent and one per cent, respectively. Nifty IT, Metal and CPSE indices are down by 0.5 per cent to 0.85 per cent. The Nifty Media and Realty indices were the top gainers with 2.46 per cent and 1.14 per cent. The Broader market indices, Nifty Midcap-100 and Smallcap-100, closed with 0.74 per cent and 0.41 per cent gains, respectively. The market breadth is 1:1 as 995 declines and 950 advances. About 219 stocks hit a new 52-week low, and 57 stocks traded in the lower circuit. Adani Enterprises, Bank of Baroda, and CGPower are today's top trading counters.
The hopes of reversal are not realised. The Nifty closed below the 200DMA. It formed another lower low and lower high bar. As it fresh swing low, the market is in a confirmed long-term downtrend. The Nifty opened just below the 200DMA with a negative gap. Every effort of recovery attracted fresh selling pressure. During the morning session was with positive market breadth, which kept the hope alive. But with the consistent selling pressure, the breadth turned negative. The index collapsed by almost 200 points in just less than 90 minutes. With today's fall, the Nifty is trading below all long and short-term moving averages. The Nifty declined for the eighth straight session and formed the ninth consecutive bearish candle. As we expected on Monday, the index has bounced and negated the historical fact. It closed at the previous day's low. Now, only a close above the prior day's high will signal the bounce. From now, every pullback will attract selling pressure. The rallies may be due to short covering, like Adani stock rise in Tuesday's market. It is better to keep the short positions with 200DMA as a stop loss.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
