MACD About To Give A Bearish Signal

The PSUs and Banks dragged the benchmark indices lower for the third day. The Nifty declined by 137.15 points or 0.56 per cent and closed at 24198.85. The Media index is the top loser with 2.24 per cent. The PSE and CPSE indices declined by 2.16 per cent and 1.94 per cent respec-tively. The PSU Bank, Metal, Banknifty, FinNifty, and Energy indices are down by 1 - 1.9 per cent.

The India VIX is down by 0.78 per cent to 14.37. The market breadth is extremely nega-tive as 1922 declines and 878 advances. About 94 stocks hit a new 53-week, and 80 stocks traded in the lower circuit. Newly listed Vishal Mega Mart and Sailife Sciences were the top trading counters. HDFC Bank, Reliance, Mazdock and Mobikwik were the top trading counters in terms of value.

The Nifty declined below last Friday’s low and erased all last week’s gains. It closed decisively below the 20DMA and 50DMA and registered a failed inverted head-and-shoulders pattern. It also closed below the 100DMA. The index also closed below the 38.2 per cent retracement lev-el of the prior uptrend. It closed below all key short-term moving averages, and it clearly shows that the 10-day 1595 points or 6.85 percent uptrend has almost ended. To resume the uptrend, the index must close above 50DMA of 24374, at least.

The MACD is about to give a bearish signal. The RSI is below 45 and near the bearish zone. The volumes were lower than the previ-ous day, so it escaped the distribution day. HDFC Bank and ICICI Bank dragged the index the most. The PSU stocks are the worst hit. After the last three days of sharp decline, it is better to avoid building fresh positions. The broader market space is still resilient, and select stocks are moving higher. The Mid and Small-cap indices outperforming the benchmark indices.

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