MACD indicates fresh sell signal

The equity benchmark indices ended flat with the support of metal stocks. NSE Nifty snapped its two days fall with 8.25 points gain and closed at 19,680.60 points. The Nifty Metal index is the top gainer with 2.94 per cent. The Energy, Media, and Auto indices gained over one per cent. The PSU Bank index is the top loser with 1.46 per cent. The FMCG, Realty, and IT indices were the top losers. The India VIX declined by 12.10 per cent on Tuesday and closed at the lowest level in more than a decade. The advance-decline ratio is at 1.02. About 183 stocks reached a new 52-week high, and 87 stocks traded in the upper circuit. HDFC Bank, ICICI Bank, ITC, and Reliance were the top trading counters on Tuesday in terms of value.

The Nifty closed flat to positive with the 60-point recovery in the last afternoon. It sustained below the 8EMA for the second day. The index had traded mostly in the negative zone after opening with a positive bias. The important technical development on Tuesday is the MACD has given a fresh sell signal. Buy the RSI is still above the 60 zone and flattened. The last two days of price action are limited to the previous week’s range. As discussed earlier, the last week’s range 19,562-19,992 range is crucial for a directional bias. The Nifty ended its decline in just two days, though it formed a bearish candle and a lower low and lower high candle. In the recent rally, the index did not fall for more than three consecutive sessions.

Now, Tuesday’s high of 19,729 points will be a crucial resistance. Above this level, the index will resume the uptrend. During the last three days, the hourly RSI has been in the neutral zone, not declined into the bearish zone. Importantly, the India VIX has declined to 12 year low of 10.24, which is the lowest since 2011. Though there is significant bearish signs are available, it is better to stay cautiously optimistic. A move below the previous week’s low, 19,562 points, means 19,992 level is the intermediate top. This decline, along with RSI below 60, will trigger intense selling pressure. As the monthly derivative expiry is in just two days, the intraday volatility may increase. It is not the time to be complacent.

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