Nifty Hovering In Non-Directional Mode

The weakness in the broader market continued, but the benchmark indices closed flat. NSE Nifty closed with just 2.50 points negative at 22,545.05 points. The FinNifty is the top gainer with 0.60 per cent. The Metal and Bank Nifty gained by 0.50 per cent and 0.28 per cent. The Media is the top loser with 3.58 per cent. The Microcap and Realty indices declined by 2.29 per cent and 2.09 per cent respectively. The Smallcap, Auto indices were negative by over 1.5 per cent. The India VIX is down by 2.97 per cent to 13.30. The market breadth is negative as 2,292 declines, and 570 advances. About 397 stocks hit a new 52-week low, and 201 stocks traded in the lower circuit. HDFC Bank, Credit Access Gramin, Polycab, Ultratech Cement, and KEI Industries were the top trading counters, in terms of value. On a monthly derivatives expiry day, the trading was dull and lacklustre. The Index has formed an inside bar. The 22513-18 support is still intact. After Monday’s gap down, the index is trading in the 155 points range for the last three days. The Volatility collapsed to the low. India VIX is at 13.20 and the Implied Volatility down to 12.39. Because of the low IV, Option premiums were unattractive to sell. The Nifty closed flat to negative for the second consecutive session and declined for the fourth session. And this is the fifth straight monthly negative close. The volumes were above the average and highest after 7th February. The decline is limited to 0.05 per cent, so the index escaped the distribution day. The open interest data indicate that the shorts were built up. The Rollovers are also higher than the previous month, indicating that the trend will continue as the traders rollover their short positions. The FIIs have the highest short position in the index this month. Any short-covering rally will hurt the retailer’s positions. As the index failed to close positive and above the prior session’s high, the bears are under control now. For an upside, the index must fill the gap area by closing above 22721. On the downside, a move below 22500 is negative and it can test 22350. The 22350-721 range is crucial for now. The upside breakout will lead to a consolidation, and may test 23130. Stay neutral until the directional bias is emerged.

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