Nifty forms a perfect Doji

Ukraine-Russia crisis impacted the stock markets worldwide drastically. The domestic benchmark index closed below the 15900 level after August 2021. The NSE Nifty ended with 382.20 points or a 2.35 per cent cut and closed at 15863.15. The CPSE and the Metal indices outperformed with a 3.5 per cent and 2.1 per cent gain, respectively. The Realty is the worst hit with 5.47 per cent. Bank Nifty, Fin Nifty, and Auto indices were down by over 4 per cent. All the other sectoral indices are down by 0.5 per cent to 3 per cent.

Only 10 of Nifty stocks are able to close in the green. The market breadth is extremely negative as 1673 declines and 450 advances. About 147 stocks hit a new 52-week low and 271 stocks traded in the lower circuit. ONGC, ICICI Bank and HDFC Bank are the top trading counters today.

The Nifty opened with a massive gap down of over 377 points. In the end, the index closed almost at the opening by erasing some of the intraday losses and formed a perfect Doji. In any case, the Nifty closes positively may attempt some pullback rally attempt. Interestingly, the Nifty has closed below the 23.6 per cent retracement level of March 2020 - October 2021 rally. This is another confirmation of bearish market conditions and double top pattern breakdown.

The daily and weekly MACD declined below the zero line. The RSI is at the 30 level and at the prior low. Any decline below 30 zone indicates that the market is entered into an oversold zone. These are the two strong bearish indications. To overcome from overbought conditions, the pullback rally may try to fill today gap. Only a close above the 16300 will give strength to the bulls. After opening in a deep negative zone, it traded in the small range of 15711-15944 range. The range breakout also gives us clues about the future move.

The Nifty is also closed below the downward channel support line. Today's drastic fall has worsened the market conditions. Unless there is an ease of geopolitical tensions, the market may not give long opportunities. On a 75-minutes chart, the RSI shows a positive divergence. Before continuing its downtrend, the Nifty may test the 16134 level. A close above 15944 is a positive sign. A negative opening and a positive closing will give us the first sign of relief and move towards 16134. Take long positions only on the confirmation reversal on a daily chart.

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