More volatile moves expected on Nifty

WITH weakness in the global markets and a rise in Crude oil and the Dollar index caused damage to the equity markets. All the global markets are trading in the negative zone. The effect of global cues dented the sentiment in the India market. The Nifty was down by 142.65 points and settled below the psychological 15,000 levels at 14,908. The open interest further rose as shorts were built in the market. Huge call selling was seen in the market. All the sectoral indices ended in the red zone.

The Metals were the worst hit with 2.7 per cent loss. All the sector indices suffered over one per cent losses. The India VIX closed at 25.56, indicating more volatile moves on the cards. As the bond yields and the Dollar index are rising, the FIIs began to book the profits. Gap opening has become a habit for the Indian stock market. In the last seven days, there were four gap ups and three gap downs. Interestingly, all the gaps were over the 100 to 250 points range. In this huge gap opening, positional trading has become walking on a razor edge. After breaking out of last week's high, the Nifty failed to sustain above it. Because of this failure, the previous week's confirmation of the bearish engulfing at lifetime high is still valid. The Nifty gained 408.95 points since last week's close, but the bearish shooting star candle on daily and weekly charts. There is nothing positive about the indicators. It again fell below the 20DMA.

The negative divergences are still present in the RSI. In fact, the Nifty registered a failed breakout as it closed below the breakout level. At the same time, it also closed below the previous day low. On the 75-minute chart, the Nifty came inside the channel again.

The bearish momentum has increased again because of the last two days of fall. As mentioned earlier, the ADX declined further and continued to be below the -DMI and +DMI. Also -DMI is moving above the +DMI. This structure shows the weaker trend strength. For next week, the 50DMA (14585) will act as critical support. Below this level, the previous week's low of 14,467 is another short-term support. Below these levels, the market will change its status to a clear downtrend. On the upside, closing above the 15,100 is important; above 15,200 will resume the uptrend again.

(The author is a financial

journalist, technical analyst, trainer, family fund manager)