Nifty forms Doji candle

On the weekend, the market witnessed a volatile session as NSE Nifty gained 52.20 points or 0.24 per cent, and closed at 21,710.80 points. The Nifty IT index has recovered by 1.29 per cent, protecting the market from a negative close. All other sector indices registered a subdued session. Either they gained or lost by just half a per cent. The India VIX continued to decline. It was down by 5.25 per cent to 12.63. The market breadth is positive as 1,377 advances and 1,171 declines. About 261 stocks hit a new 52-week high, and 154 stocks traded in the upper circuit.

HDFC Bank, RPower, HAL and ICICI Bank were the top trading counters on Friday in terms of value.

The Nifty has formed Doji candles on weekly and daily timeframes. It closed negatively by 0.9 per cent lower on a weekly basis on a higher volume than the previous week, and above-average. On a daily chart, it closed above the prior day’s high, which is positive. But after opening with a positive gap, it did not sustain at opening highs. The Last hour’s sharp recovery on short covering influenced the closing price. For the last four days, the index has taken support on the 20DMA.

The Bollinger band continued to contract for the fifth day. The bearish divergence in RSI still exists. The MACD is bearish as the histogram increased and indicates negative momentum. On an hourly chart, the index formed a lower-high swing. The decline in VIX is a worry again. It declined by over 13 per cent this week to 12.63, which is a big worry. At the lifetime highs, the lower VIX indicates that the intermediate high is already in place. Historically, January is the most bearish month. In the last five years, it never closed above the opening level. Many of the market tops were occurred in the January month. So, it is better to avoid the aggressive fresh purchases.

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