More volatility on weekly F&O expiry day

The domestic markets failed to sustain the opening gains. It also erased most of its previous day's gains. The Nifty settled at 17245.65 with a net loss of 69.85 points or 0.40 per cent. The Nifty Metal index is the top gainer with 1.21 per cent, Energy index up by 0.83. The Bank Nifty and Fin Nifty declined by 0.55 per cent and 0.88 per cent, respectively. The Auto index is the top loser with 1.04 per cent. The VIX up again, by 2.81 per cent. The Market breadth is negative as 1210 declines and 823 advances. About 50 stocks hit a new 52-week high. And 104 stocks traded in the upper circuit and 101 were in the lower circuit. HDFC bank, Reliance, Tata steel was the top trading counters for the day.

The domestic equity market is witnessing the see-saw moments. Opened with a very optimistic note, the Nifty closed 160 lower from the day high. It took support at 50DMA for the day. The selling pressure was resumed soon after it opened with a positive gap. The Nifty moved down by 244 points from the day high. Because of this fall, the index has formed a dark cloud cover kind of a pattern. The sharp gains of yesterday erased 50 per cent. The index is holding rising trend line support for the day. Currently, the 50DMA is placed at 17225 and the 200DMA is at 17021. These levels will act as crucial short-term support.

The 23.6 per cent retracement levels also placed at 17024. This cluster support is very important for the market to maintain the bullish bias. Below these levels, the 20DMA is placed at 16909. To continue the bullish bias, the index must not close below the prior day's low. The market has consolidated within the range for the last four days and does not give directional bias. But, the intraday volatility is increasing. As the weekly derivatives expiry is in place, expect more volatility even on Thursday. The Nifty future volume and Open Interest declined. This derivatives data shows that the profit booking is going on. The PCR is at 1.25. With the above evidence, the market is in a neutral for now. Any decisive move will give a directional bias. Wait for that.

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