Nifty bearish despite late recovery

INDICES slipped further lower on Monday, with a renewed selling pressure. The benchmark indices tested the critical support levels and breached the short term supports. Metal and IT stocks saved the market from a bigger fall. The Nifty lost 101.45 points and closed at 14,929.5. Bank Nifty fell by 0.88 per cent. Private banks and Financial services indices down by 1.24 per cent and 1.08 per cent. Metal index was up by 1.04 per cent and IT advanced by 0.56 per cent. The overall market breadth was extremely negative, with 1,270 declines and 679 advances. India VIX was down by 2.21 per cent.

The benchmark indices slipped further with the selling pressure in banks and financial services stocks. The Nifty decisively closed below the 20DMA. The recovery of 150 points in the afternoon session saved the market from big fall. It recovered over 50 per cent of the losses. With this, it formed a hammer candle. As mentioned yesterday, it breached 14,953-14,980 zone of support. It almost reached 50DMA support.

With today's move, the momentum is clearly on the bearish side. But, if late afternoon continues above 20DMA of 15003 and today's high 15,048 zone will result in short term positivity. The market is still in a consolidation zone. The broader range of 15,432– 4,469 has to take off for a trend change. As I kept mentioning these ranges for the past few days. Currently, the 50DMA of 14,699 and prior swing low of 14,469 is very critical for the market. The -DMI is very much above the +DMI, an indication of the negative movements dominating the market. MACD histogram also increased with today's move. The weekly MACD is about to give a sell signal. We need to watch the FII figures for this week to get a clear view on the demand for shares.

(The author is a financial journalist, technical analyst, trainer, family fund manager)