Markets reeling under bear grip
The Bank Nifty and the FinNifty were the worst performers; Nifty Auto index fell by 1.36%, and the FMCG declined by 1.13%
image for illustrative purpose
The market snapped four days of rally and erased 50 per cent of its gains of the week. The benchmark index, Nifty, fell by 263.80 points or 1.77 per cent and registered a distribution day. The Bank Nifty and the FinNifty were the worst performers, with 2.77 per cent and 3.03 per cent. Barring Pharma, which gained 1.28 per cent, all other sectoral indices declined. Nifty Auto index fell by 1.36 per cent, and the FMCG declined by 1.13 per cent. The broader index Nifty-500 down by 1.34 per cent, and the Midcap and Smallcap indices fell by half a per cent each. The India VIX closed at 23.0275. The market breadth is negative as the Nifty failed for the seventh time to break the 14,880 resistance barrier.
It closed just above the 14,880 level, but there is no conviction on the move. As suspected, it opened with a gap down and closed near to the day's low. It formed long upper shadow candles on daily and weekly charts. This is the sign of profit booking at higher levels. It erased more than the last two days of gain and closed at the lowest point of the day. It retraced about 50 per cent of the previous five trading sessions, 6.3 per cent upswing. With fall from Thursday's high, the indicators turned negative.
Importantly, on a monthly chart, the Nifty has formed a bearish engulfing and hanging man candle. These two candlestick patterns are bearish in nature. As they formed on a long-term chart, it's more valid. The Nifty also forming lower highs and lower lows is also negative. Even the monthly momentum is waning. Though it closed above the previous week's high, as it formed a bearish shooting star candle, the conviction on the long side is very, very minimal. Next week's opening will be crucial as event risks involved. The index heavyweight Reliance financial results and the five state election results are the keys for the market moves next week. A close below 14,590 will lead to another retest of the support.
— The writer is a financial journalist, technical analyst, and family fund manager
