Nifty close above 4.2k is a must for upward move

THE market closed again on a negative note with renewed selling pressure in the afternoon. The first-hour surge was short-lived. The Nifty ended at 14341.35 with a 64.80 points decline. On a weekly basis, it lost 291.50 points or 1.9 per cent. The Smallcap and Midcap indices have outperformed the benchmark with half a per cent gains. Energy and Media closed 0.96 per cent and 0.47 per cent gains. FMCG and IT indices were down by 0.93 per cent and 0.84 per cent decline. The other sectoral indices declined by less than a half per cent. India VIX closed at 22.69. Out of 50 Nifty stocks, 34 stocks declined. Overall market breadth is positive as 1,032 advances and 834 declines were recorded. The Nifty once again closed below the 100DMA. During the last four trading sessions, it closed below the 100DMA on alternate days. Earlier this kind of oscillation was seen at 50DMA. Before, a decisive close below the 50DMA, it oscillated for two weeks. For the last four days, the 50DMA is trending down, indicating the weakness in the trend. Once the 100DMA also trends down, then the market will decline further.

On the weekly chart, the Nifty formed another indecisive, long-legged doji. The consecutive Doji candle on a weekly chart means a definitive weaker market. As the Nifty forming lower highs and decisively below the channel support line and 20 weeks moving average is not a good sign. At the same time, the momentum on the downside is increasing. On a daily chart, it formed a shooting star-like candlestick pattern. Even on the last Friday, it formed a similar candle. The last two Mondays, the Nifty opened with a huge gap down. In this scenario, the Nifty must close above 14,468 to get positive strength, and closing above 14,700 is a short term reversal. In any case, the Nifty opens at least one per cent above and closes above the 14,400 would be a positive sign. But, violation of 14,265 support will have severe bearish implications, where the probability is higher. Certainly, it is not the time to be bullish.

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