Nifty Below All Key Moving Averages

The equities nosedived as the selling pressure was across the board. Mid and Small-cap experienced the most intensified selling pressure. NSE Nifty declined by 308.80 points or 1.32 per cent and closed at 23,071.80. Microcap index is the top loser with 3.64 per cent. The Small-cap, Realty, Mid-cap indices declined by over three per cent. The Media, PSE, Healthcare, Auto, CPSE, Consumer Durables, PSU Bank, and Energy indices declined by over two per cent. The India VIX is up by 2.94 per cent. Market breadth is extremely negative as 2,532 declines, and 326 advances. About 407 stocks hit a new 52-week low, and 306 stocks traded in the lower circuit. HDFC Bank, Zomato, Bharti Airtel, BSE, and Mazdock stocks were the top trading counters in terms of value.

The Index declined sharply and closed below the crucial 20DMA support decisively. Now, it is 0.97 per cent below the 20DMA. This mean average is also entered into the downtrend. Nifty is back to below all key moving averages. Importantly, the index closed below the 3rd February minor swing low of 23,222 points. Another important technical development is that the index closed MACD below the 61.8 per cent retracement level of the prior upswing and tested the 78.6 per cent retracement level.

It registered the biggest fall in the last five days and 21st January. The volumes were higher than the previous day, and a distribution day was registered. Now, Nifty holds two distribution days. With this session’s decline, it is confirmed that the 23,807 is at the short-term top. In any case, the index closed below 23,005 points, except for the recent major low of 22,786 points, which will be tested. Midcap, Smallcap, and Microcap indices are down by over three per cent. All the sector indices were negative. This broader market selling pressure indicates more pain is due. It is better to stay away from the fresh purchases.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)