Nifty in a neutral zone

The equity markets closed flat after a volatile day. The initial gains did not sustain as the broader market witnessed selling pressure. The Nifty finally settled with a 2.15 points gain after as 120 points smart recovery from the day's low and closed at 16,282.25 points. The Metal index gained by 3.14 per cent. Energy, Realty and Infra indices closed with moderate gains. Pharma index declined by 1.46 per cent. Bank Nifty and Fin Nifty closed with a 0.6 per cent decline. Midcap and Smallcap indices also closed in negative territory. The market breadth is extremely negative as 1,284 declines and 661 advances. About 47 stocks hit a new 52-week high, and 358 stocks traded in the lower circuit.

Nifty recovered smartly from the day's low with metal stocks and Reliance rally. Opened with an optimistic note in positive territory, it declined over 170 points in the first two hours of trading. As the daily trading range increased, another bearish bar formed, with a lower low, lower high candle. The consolidation extended for another day, as expected earlier. The momentum has declined further and with a negative index breadth. Tata steel and Reliance saved the market from the negative close. As the Nifty recovered over 120 points from the day's low, the index is showing strength. At the same time, it failed to move higher and was unsuccessful of getting confirmation. Even Tuesday's Doji candle did not get the bearish confirmations. As we expected on Tuesday, the consolidation may continue for another two days within the current range. Nothing has changed in the indicators, as the market is in a neutral zone. The positive directional movement indicator +DMI is declining. Nifty is forming a series of bearish bars in the current consolidation, and it is better to avoid the long positions.

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