MACD indicates strong bearish bias
As Nifty registered tight range base breakdown, expect more downside, in the short-term; Stay away from fresh long positions
The 22,557 level will act as short-term support, with the 22,350-22,281 zone providing strong backing. As expiry week begins, short-covering and rollovers could push prices toward 22,800. Watch the 22,557-22,500 zone—if it fails, a sharp decline to 22,281 may follow
The equities sharply declined again with all-round selling pressure. The Nifty declined by 242.55 points or 1.06 per cent and closed at 22,553.35. The FMCG, Auto, and Pharma indices closed with moderate gains. The Nifty IT and Metal indices declined by 2.71 per cent and 2.17 per cent, respectively. The Commodities, CPSE, and Services indices down by over 1.5 per cent. PSE, Infra, Microcap, Nifty Junior, Energy, and Oil and Gas indices declined by over one per cent. The India VIX is also down by 0.60 per cent to 14.44. The Market breadth is negative as 2,108 declines, and 767 advances. About 214 stocks hit a new 52-week low, and 178 stocks traded in the lower circuit. HDFC Bank, M&M, ICICI Bank, Infosys, and Zomato were the top trading counters in terms of value.
Nifty decisively broke the 22,800-700 support zone. It declined by 14.3 per cent from the all-time high, and decisively entered into the Category-2 correction. The index has taken support at a 50 per cent retracement level of the prior rally of 18,838-26,257. Now, the 22,557 has become a short-term support. As mentioned earlier, the 22,350-281 zone will be the strong support for now. As we entered into the expiry week, the short-covering and rollovers may lead to a bounce towards 22,800 again. It will be a retest of the breakdown point. The RSI is on the 30 lines and ready to enter into an oversold condition. The MACD histogram shows a strong bearish momentum. In all time frames, the index has formed a major lower low. The only positive in this session’s fall is that the volumes were lower than the previous day. The index has formed an evening star candle. In any case, a gap-up opening and a positive closing on Tuesday will confirm the short-term reversal. Watch the 22,557-500 zone of support and price behaviour. If this does not hold for some time, it may lead to sharp fall again towards 22,281. As the index registered the tight range base breakdown, expect more downside, in the short-term. Stay away from fresh long positions.
(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)
