Nifty in negative, hopes for positive closure soon

ANOTHER black Monday rocked the markets. A record-level spike in Covid-19 cases and several State governments planning to impose stricter measures to control the menace dented the sentiment. The Nifty opened with a 311.25 point gap down. Finally, it settled at 14,359 with a 258 points decline. Barring Pharma, all the sectors ended with losses. Once again, the BFSI sectors witnessed heavy selling pressure. The BankNifty lost over 1,050 points, and FinNifty lost 3.32 per cent. Realty also lost 3.66 per cent. Even the much broader index, which represents 90 per cent of the market capitalisation, the Nifty-500 index fell by 1.83 per cent. The market breadth is extremely negative, with 1,535 declines and 398 advances. India VIX rose by 10.93 per cent.

Technically, the Nifty closed below the channel support line on a weekly chart. Incidentally, Monday also violated the trend line. It also opened and closed below the 20 weeks moving average. The question is, will it repeat the last week's price action? On a daily chart, the Nifty formed a hammer candle. It also bounced back above the 100DMA. But, the efforts to close above the 100DMA failed. On the hourly chart, though it formed higher highs and higher low bars, the last hourly chart indicates the selling pressure at the higher levels. The momentum is clearly on the downside in all time frames. The recovery after the first hour of trading mainly because of the bounce in some of the heavyweight stocks. The current counter-trend consolidation is 51 days old and just oscillating around 100DMA. The RSI reached a support line again. The 9-period average is acting as a stiff resistance. A positive close on Tuesday will continue the up move and try to fill today's gap. Let us wait and watch for tomorrow for a higher high or an inside bar. In both cases, today's low 14,191 is the key for the near future.

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