Nifty gains amid high volatility

On highly volatile day, the Nifty closed with modest gains and was able to close above the 17000 level. On a buying and selling, the Nifty was able to gain just 27.50 points and settled at 17053.95. The Nifty IT is the only sector index that gained by 0.76 per cent. The Media, PSU Bank, and the Smallcap-100 indices are down over two per cent. The other indices are down by 0.5 per cent to 1.6 per cent. The India VIX touched 23.82 levels today and finally cooled off to 20.83. The market breadth is extremely negative as 1599 declines and 445 advances. About 79 stocks hit 52-week low, and 261 stocks traded in the lower circuit. The broader market's relative performance is declining.

The daily ranges, and the volatility have increased in the market. After opening in the green territory, the slipped in the red within five minutes. It formed low and bounced to the day's high. The Nifty recovered 377 points from the day's low. The daily range has defined in the first two hours of trading. It did not sustain at the higher levels and fell by over 100 points from the day's high to close. The volatility has increased to the alarming level of 23.82 during the day and settled at 20.83. The Nifty formed a perfect doji candle with a long lower shadow. This shows that buying support has emerged at the day's low and. The 150 DMA support is currently at 16690, and the 61.8 per cent retracement level is at 16694. The zone of support will be critical now. Before that today's 'low 16782 will also act as key support.

A close above the doji close is positive for the short-term. In any case, the 16782 is protected and closes above the 17120, and the bounce will continue and test the 17328. The 5EMA is placed at 17275. For the very short-term, Nifty may move between 16782-17324. Above this zone, the upside target is open to 17500-600, which last week's high. The market structure is disturbed as the benchmark index has already made lower tops and lower bottoms. The number of distribution days stands at six, and the 50DMA is in a downtrend. The pullback may give an opportunity to exit the long positions.

(The author is financial journalist, technical analyst, family fund manager)