Nifty Forms Doji Candle On Weekly Chart

The NSE benchmark index Nifty closed on negative note as the heavyweight stock’s earnings failed to enthuse the market. The Nifty declined by 108.60 points or 0.47 per cent and closed at 23203.20. The CPSE, Oil and Gas indices gained by 1.62 per cent and 1.56 per cent, respectively, are the top gainers. The Realty, Energy, Infra, Metal, Commodities, and FMCG indices advanced by over one per cent. The Nifty IT declined by 2.68 per cent, and the Private Bank index down by 2.17 per cent, are the top losers. The FinNifty, is also down by 1.53 per cent. The India VIX is up by 1.83 per cent to 15.75. The Market breadth is positive as 1,425 advances and 1,370 declines. About 46 stocks hit a new 52-week low, and 93 stocks traded in the upper circuit. Reliance, Axis Bank, Infosys, BLS, and HDFC Bank were the top trading counters, in terms of value.

The Nifty ended its three-day counter-trend and closed below the prior day low. It recovered smartly from the day’s low, but closed negative. On a weekly chart, the index has formed a long-legged small body candle. The volumes were higher than the previous week. The major technical development is that the 50DMA closed below the 200DMA and registered the death-cross, which is long-term negative. As the index formed an indecisive candle at a low on the weekly chart, the next week’s price action is very crucial. In any case, a close above 23,392 will be positive, and the index may try to consolidate below the 50-week average of 23,687 points. The weekly RSI is about to shift its range into the bearish zone. The weekly MACD line already declined below the zero line. The index escaped the distribution day, as the volumes were lower than the previous day. The price pattern looks like an end-of-the-counter trend consolidation. As the index formed a Doji candle on a weekly chart, next week’s close is very crucial. It is better to stay on cash equivalents and on the sidelines.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)