Nifty closes below 20DMA for 3rd time

The upbeat opening didn't sustain till end of session on Monday. The benchmark indices erased all the opening gains. Finally, the Nifty closed at 15,692.60 points with miniscule gain of 2.80 points. The Realty index up by 3.61 per cent. All the other sectoral indices either declined or advanced by less than half a per cent. The Midcap-100 and Smallcap-100 indices outperformed with 0.60 per cent and 0.44 per cent gains. The India VIX gained by 0.39 per cent. The market breadth is positive as 1,179 advances and 840 declines. About 238 stocks hit new 52 week high and 221 stocks hit the upper circuit.

The Nifty closed below the 20DMA for the third successive day. For the third time, it also declines below the 15,670 level in the last 15 days on an intraday basis. It closes flat to positive, but the intense profit-booking erased the decent initial gains. It declined over 150 points sharply and recovered a bit at the end. It still closed within the zone for another day. It is hesitant to close below the 15,670 support. For a bearish confirmation, it has to close below the 15,635 decisively. If the bears fail pull down, there is always a chance to bounce.

The overall and index breadth is positive. Today's decline is because of a fall in some of the heavyweight stocks. It is early to form a bearish view. At the same time, there is no bullish strength. The 20DMA is in a down-trending mode. The 20DMA is critical for the market now. As long as it trades below to it avoid the long positions. And as long as it trades above 15,635-15,670, it is better to avoid the long positions. Though the indicators suggest the weakness we can't go for a short position unless it gets price confirmation, as many bearish patterns were failed in the recent past. In 15,635- 15760 range, we may not get clear trading opportunities.