Nifty Forms A Long-Legged Bearish Candle

With the extremely negative market breadth, the equities witnessed a profit booking in the broader market. The index has given a weaker signal by closing at the two-day low. On an hourly chart, the Nifty formed a broadening formation or a megaphone pattern, which is negative

The equities witnessed the profit booking across the sectors. NSE Nifty declined by 41 points or 0.16 per cent and closed at 25,377.55 points. Bank Nifty and FinNifty were the gainers with 1.08 per cent and 1.40 per cent, respectively. All other sectoral indices declined. The Nifty IT is the top loser with 3.05 per cent, followed by Pharma at 1.53 per cent. The Oil and Gas and Healthcare indices are down by over a per cent. The India VIX is up by 6.22 per cent to 13.37. The market breadth is extremely negative as 1,839 declines and 958 advances. About 131 stocks hit a new 52-week high, and 102 stocks traded in the upper circuit. BSE, Bajaj HFL, HDFC Bank, Bajaj Finance, and Motherson are the top trading counters on Wednesday in terms of value.

Equities traded nervously in an increased trading range just before the event risk. The Nifty formed an outside bar and a long-legged bearish candle. The Nifty has broken out of the last three days’ range on both sides. During the opening, it hit a new high at 25,482.20 and made a lower low of the last four days at 25,285.55 points. The 8EMA acted as a support for the day. Only the banks and financials were positive, saving the index from a bigger fall. The Nifty IT index is the worst hit by over three per cent. With the extremely negative market breadth, the equities witnessed a profit booking in the broader market. The index has given a weaker signal by closing at the two-day low. On an hourly chart, the Nifty formed a broadening formation or a megaphone pattern, which is negative. The last two days of higher volume also indicate that the smart money is moving out. For now, all the eyes are on the Federal Reserve decision. Whatever the outcome, expect a volatile move on Thursday, which is also a weekly derivatives expiry day. Trade only when the market cools off from the volatility.

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