MACD indicates declining momentum
In last 5 sessions, all the opening gains were not sustained till the end
image for illustrative purpose
The banks and financial stocks spoiled the most positive start. NSE Nifty closed flat with just 4.80 points gain. It closed at 19,347.45 poins. Bank Nifty declined by 0.59 per cent, and the FinNifty was down by 0.50 per cent. Nifty Energy index also declined by 0.37 per cent. The Realty index is the top gainer with 1.42 per cent, followed by the Metal index with 0.92 per cent. The IT, FMCG, Auto, and Mid-cap indices gained over half a per cent. All other sectoral indices closed with modest gains. The India VIX is back to below 11.8 with a 3.48 per cent decline. About 139 stocks hit a new 52-week high, and 88 stocks traded in the upper circuit. Zomato, HDFC Bank, and Adani Enterprises were the top trading counters today in terms of value.
The Nifty opened with a 91-point positive gap, but failed again. The most positive beginning ended very disappointing with a sharp decline in the late afternoon. The index moved above the 20DMA for a while, but closed below all key moving averages. The gap was filled in the last hour, as it closed below the previous day’s high.
The nature of decline is very impulsive, and the higher volume in the last shows a strong bearish domination. It almost formed an engulfing bar and closed below the 8EMA. For the last three days, the 8EMA has become a key level for Nifty. As we discussed yesterday, the rollovers were picked up and currently stand at 50.47 per cent.
The heavyweight sector index, the Bank Nifty, has formed a big engulfing bar, leading the market fall on Wednesday. It fell by 438 points from the day’s high. Due to the decline in banks and financials, the Nifty also fell by 118 points from the day high. The MACD shows that momentum has declined sharply. The RSI is oscillating around the 45-46 zone. On an hourly chart, the index closed below the moving average ribbon, and the MACD is about to give a bearish signal. In the last five days, all the opening gains were not sustained till the end. The positive factor is that the index is able to close above the sloping channel breakout for the second day. It also formed a higher high candle.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
