Nifty Fails To Build Positive Momentum For 5th Session

The higher volume than the previous day on a 0.34 decline means Nifty registered a distribution day. After testing the 50% retracement level of the prior 11.47% decline, the index consolidates within a very small range. The 24,529 and 24,432 levels are the key supports within the range

The equity frontline indices registered a negative close with renewed profit booking. NSE Nifty declined by 87.90 points or 0.36 per cent and closed at 24,647 points. The IT and Metal indices gained by 0.77 per cent and 0.25 per cent, respectively. All other sector indices were negative. The media index is down by 2.29 per cent and is the top loser. The Microcap, FMCG, PSE and CPSE indices were down by over one per cent. All other indices registered moderate declines. The India VIX is down by 0.58 per cent to 13.19. The market breadth is negative as 1,904 declines and 896 advances. About 101 stocks hit a new 52-week high, and 93 stocks traded in the upper circuit. Nuvama, Waree Energy, Reliance, and Bharti Airtel are the top trading counters in terms of value.

The Nifty failed to build positive momentum for the fifth consecutive day. It is still trading within last Thursday’s range. The volume shrunk, and participation was at the lowest level. On a weekly derivative expiry day, volatility is also not high. The Nifty has formed a bearish candle, a shooting star, and a lower high and lower low. It tested the critical 8EMA support. The index retraced 50 per cent of the last Thursday’s range. It also tested the prior breakout level for the second time. Barring IT, all the sectoral indices are in red, and the market breadth is deeply negative. For the last five days, the trading range was limited to just 240 points or less than a percentage.

This tight-range trade may lead to an impulsive move on a breakout. The higher volume than the previous day on a 0.34 decline means the Nifty registered a distribution day. After testing the 50 per cent retracement level of the prior 11.47 per cent decline, the index consolidates within a very small range. The 8EMA of 24529 and the 50DMA of 24432 are the key supports within the range. For now, stay sideways as long as it trades in the 24295-857 range.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)