Nifty forms an inside barand Doji candle

The domestic benchmarks erased most of Monday's gains and closed more than one per cent lower. The Ukraine tension is weighing on the stock market as the negotiations concluded without any solution. The NSE Nifty closed with 187.95 points decline at 16,605.95 points. The Metal index protected the market from a big fall with a 4.07 per cent gain. Media and Energy indices advanced by 1.87 per cent and 1.27 per cent. Auto, Bank Nifty, FinNifty fell by 2 - 2.9 per cent. The remaining sector indices declined by a percentage on average. The VIX closed at 29.23, up by 2.32 per cent. The market breadth is neutral as 1055 advances and 1032 declines. About 25 stocks hit a new 52-week high, and 124 stocks traded in the upper circuit. Tata Steel, HDFC Bank, Hindlace were the top trading counters.

After a highly volatile trade, the Nifty has formed an inside bar and Doji candle. The benchmark index opened with a 200-point gap and sustained the losses until the late afternoon session. With the recovery of US futures, the benchmark indices have witnessed a sharp surge in the last 30 minutes. Metal stock played a vital role in recovery. The index failed to move above or below Monday's high or below. The Nifty traded below the short-term averages, even after 125 points recovery from the bottom. During the day, the VIX moved above 30.84, which indicates that the market will witness more impulsive moves. The leading indicator RSI declined below the 40 zone and entered the bearish zone again. The Weekly momentum increased on the downside.

There have been seven gaps in the last ten days. Some of these gaps were filled, and some more had to be filled. The last 30-minute recovery may be because of the weekly expiry. The Open Interest data doesn't indicate short build-up. On a 1.12 per cent decline day, the Open Interest has increased by 17.2 per cent. This is nothing but a fresh short-build up in the market. The futures volume is above the average, but below the previous four days. The last 30 minutes sharp surge is not giving the confidence to go long. Only above the 16816 will give confidence to the bulls. But, any decline below 16478 will be negative for the market.­

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