Nifty forms bearish bar

The equities ended in positive territory, as the expiry trades and short covering. NSE Nifty gained by 31.65 points or 0.14 per cent and closed at 22,1982.80. Only Nifty Media and IT indices declined by 0.91 per cent and 0.06 per cent, respectively. The PSU Bank is the top gainer with 1.30 per cent, and the Metal gained by 0.91 per cent. All other sectoral indices registered less than half a per cent gain. The India VIX is down by 4.64 per cent to 15.57. The market breadth is positive as 1,399 advances and 1,141 declines. About 69 stocks hit a new 52-week high, and 130 stocks traded in the lower circuit. PNB, HDFC Bank, NMDC, and Reliance were the top trading counters on Thursday, in terms of value.

In the leap year, the February month ended on a positive note. During the leap years, history did not show any good things. 1992, 2000, 2008, 2016 and 2020 years have witnessed very bearish momentum as they registered historical events like the Harshad Mehta scam, the Dotcom bubble, the world financial crisis, demonetisation, and the Covid crash. The 2024 looks pretty good, but the General Elections will have a greater impact on the market. Apart from our General elections, the US Presidential elections are also scheduled this year. As the market structure is in consolidation near the all-time high, is this situation like the calm before the storm?

The Nifty gained 257.1 points or 1.18 per cent in the leap month. It traded in the 767.30 points range and formed a small body candle. The candle looks like an evening star. The previous month’s Doji candle failed to get the confirmation for bearish implications. On the weekly chart, the index has formed a bearish bar, declining by 229.90 points or 1.03 per cent. The weekly volume was much lower. It formed a lower high and lower low candle, which shows an exhaustion in the trend. The Nifty is able to close above the 20DMA with higher daily volume. The expiry adjustments resulted in Thursday’s bounce. Even though all sectoral indices were in positive territory, the market breadth did not show internal strength.

The MACD histogram shows no positive momentum. The RSI is still below 55, and the divergence remains intact. The Reliance, ICICIBank, and SBI have contributed more than 50 per cent of Thursday’s gains. The last 75 minutes volume influenced the market to close in the positive territory. This is because of the short covering and the rollovers. For an upswing to continue, it must close above Wednesday’s high of 22,229 decisively. Otherwise, it is Sell on Rise market only. On the downside, if the index closes below the 20DMA on a weekly closing basis, expect the index to test the 50DMA of 21,743 level, which is immediate support. Stay cautious from now on; the market is not giving any directional bias currently.

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