Nifty Forms Hammer Candle

The equities reacted negatively post-budget day. The PSE, and CPSE stocks were the worst hit. The Nifty declined by 121.10 points or 0.52 per cent and closed at 23,361.05 points. NSE Nifty and Consumer Durable indices gained by 0.68 per cent and 0.55 per cent, respectively. The Healthcare, Pharma, and Auto indices also closed with moderate gains. The PSE and Energy indices declined sharply by 3.20 per cent and 3.00 per cent, respectively. The CPSE, Oil and Gas, and Smallcap indices are down by over two per cent. All other indices declined by 0.16 per cent to 1.73 per cent. The India VIX is up by 1.83 per cent to 14.35. The market breadth is negative as 2,063 declines and 787 advances. About 79 stocks hit a new 52-week low, and 191 stocks traded in the lower circuit. Bajaj Finance, L&T, HDFC Bank, Zomato, and HAL were the top trading counters in terms of value.

The Nifty has ended its counter-trend rally at 200EMA.

It closed lower with a negative breadth. The volumes were higher than the previous day, and it registered a distribution day. Though it closed near to the day’s high, the momentum is lagging. After the opening decline, the index is able to protect the first-hour low. The Index has formed a Hammer candle. It took the support on 20DMA and closed above the 8EMA. It formed higher lows and higher highs on the hourly chart. The RSI declined to below the 50. The DMI is above the +DMI, indicating the bearish bias. The index must close above this session’s high of 23383 to resume the upside move. Saturday’s high of 23632 will be the immediate resistance.

The Bollinger bands are contracting, which is an indication of contraction. It is necessary to close above the 23632 to avoid a downside move. In any case, the index closes below 23294 and 23250 will be negative and will continue the negative bias. The down side targets are open to below 23000. As the events are lined up this week, the indices are in the contraction. The volatility indicators, India VIX, and IVs had gained during the session, which is an indication of possible impulsive moves. As long as the index trades 23250 - 23632, stay neutral and sideways.

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