Markets may trade low for 3-5 days

The sharp decline in the global markets Tuesday night influenced the domestic markets. The benchmark indices opened with a gap down and traded protected the first hour low. NSE Nifty declined by 57.80 points or 0.32 per cent and closed at 18,089.85. The Nifty FMCG, Media and Realty indices closed with small gains. The IT and Metal indices were the top losers, with one per cent and 0.98 per cent, respectively. All other sector indices are down by half a per cent on average. The Market breadth is 1:1 as an advance-decline ratio is at 1.04. About 76 stocks hit a new 52-week high, and 49 stocks traded in the upper circuit. HDFC Bank, RVNL, and ICICI Bank were the top trading counters today. All the railway stocks were in the limelight and traded in heavy volumes.

The Evening Star candle got confirmation for its bearish implications as the Nifty closed below its low. The opening gap was filled in the second hour, but did not sustain at the higher levels. Normally, once the Evening Star gets confirmation, expect 3-5 days of counter-trend. Only in case of a strong close above the evening star high will it negate the bearish view. The long shadow candles on an hourly show that the bulls and bears were fought over the price discovery. The volumes were much lower than the previous day, which is not an indication of distribution. After the first hour of trading, volume dried up. Today also, most of the price action is limited to the first-hour range. Like the price, the RSI has also formed a swing high. The hourly RSI declined near the neutral zone. The hourly MACD line is below the signal line. Both the Nifty and Bank Nifty got the Evening Star’s bearish implications. The only difference is that the Bank Nifty closed above the opening level. The Bank Nifty volumes were lower in the last five days. As the Federal Reserve meeting is scheduled, any adverse decision on rate hike and commentary will dampen the sentiments. The market is expecting a 50-basis point hike, which is higher.

(Chief Mentor, Indus School of Technical AnalysisFinancial Journalist, Technical Analyst, Trainer, Family Fund Manager)