Nifty can go up if crosses 14.6k level for 2 days

INDIAN stock market declined for the fourth straight day. Another day positive opening did sustain. The rise in Covid cases and the Federal reserve meeting weighed the market sentiment. The Nifty was down by 189.15 points and closed at 14,721.30. The BFSI sectors were the worst hit today. The PSU Bank index fell sharply by 3.77 per cent and the Energy index was down by 3.11 per cent. Banknifty declined by 1.65 per cent. None of the sectoral index closed positively. IT and Pharma indices were least affected as they fell by 0.68 per cent and 0.47 per cent respectively. The Market breadth is extremely negative as 1,537 declines and only 377 advances were recorded. India VIX closed flat at 20.16

The Nifty breached crucial 50 DMA support and approaching the channel support. For the sixth time that the index tested the 50 DMA since March 2020 lows. All the declines in the last one year limited to 5-6 days.

As it registered the fourth consecutive negative day, we need to wait whether this fall can continue beyond six days. The immediate channel support is at 14,660, and the swing low is at 14,469. These two levels are very important for the market to be in the uptrend. If these levels are protected in the next two days, we can expect a small bounce towards 14,953-15,000. As the Nifty closed below Monday's low and just below the 50DMA, it is better to avoid long positions now.

The daily 14 periods RSI has broken down the support and holding at a prior low. The weekly MACD histogram turned negative for the first time after the last week of May 2020. In case, the Nifty breaches 14,469 on a weekly closing basis, the market can be categorised as trend reversal as the formation completes with two lower highs and two lower lows. It could be a double top too. We also need to watch, and the fall will fill the 2nd February gap. As the Nifty was much below the previous week's low, it's time to be cautious. Even on the 75-minute chart, the RSI did not reach an oversold condition indicating some more decline is due. Only above the prior bar high, be with a positive bias; otherwise, avoid taking a long position.

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