MACD indicates fresh bearish signal

The equities witnessed profit booking after a massive rally. The benchmark index closed flat to positive at 23668.65 with 10.30 points gain. The broader market breadth is negative as a majority of sectoral indices declined. The Nifty IT is the top gainer with 1.32 per cent. The Services, FinNifty and Private Bank indices closed with moderate gains. The Nifty Microcap-150 index is the top loser with 2.45 per cent. The Consumer Durable, PSU Bank, Media, and Smallcap indices declined by over 1.56 per cent. The Realty, Metal, Oil and Gas, Energy, PSE, Midcap, and Pharma indices are down by over one per cent. The India VIX is down by 0.47 per cent to 13.63. The market breadth is extremely negative as 2,258 advances and 674 declines. About 96 stocks hit a new 52-week low, and 157 stocks traded in the lower circuit. HDFC Bank, ICICI Bank, BSE, Zomato and Reliance were the top trading counters in terms of value.

The Nifty showed signs of exhaustion clearly today. Though it closed flat, it formed a bearish candle. After opening with over 93 points positive gap, the index closed much below the opening level. The Nifty made a higher high at 23869.60 and reacted negatively. it closed below the prior swing closing, too. It closed almost at the day’s low, with negative market breadth. The volumes were higher than the previous day, indicating distribution, but the Nifty escaped being a distribution day as the close was positive. The hourly RSI and MACD are reacting to the extremely overbought condition. The MACD has given a fresh, bearish signal. Still, the daily RSI is in the overbought zone. During the last 90 minutes, the selling pressure was intensified. Session’s high of 23870 is the crucial resistance. As long as the index trades below this level, expect consolidation. The counter-trend consolidation may extend to the 23420 and 23140 zones. The next ten days of price action are very crucial to define the end of a bear market correction. Let us hope a higher low will form and the market will rally to the new high soon.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)