Nifty in neutral zone

After two days of huge volatile moves of 500 points, the market consolidated within the 233 points range. The equity benchmark indices ended in the negative zone after volatile moves in a smaller range. NSE Nifty mostly traded positively, but the news flow dragged the market into a negative zone. The Nifty declined by 30.25 points and closed at 17322.20. It actually declined 168 points from day to close. The Realty index is the top gainer with 1.13 per cent. Pharma, Energy and FMCG closed marginally higher. The PSU Bank index fell by 1.17 per cent. Most of the sectoral indices are down by less than half a per cent. The market breadth is positive as 1197 advances and 850 declines. About 24 stocks hit a new 52-week high, and 23 are at a 52 week low. HDFC and the newly listed Manyavar are the top traded counters today.

Though the Nifty moved in a smaller range, the volatility remained high. It opened with a positive gap and moved above the 50DMA. With a renewed selling pressure, closed below the 20 and 50DMAs. The 20DMA is currently at 17408, steeply in a downtrend. The 50 DMAs is flattened. Now, 20 and 200DMAs are acting as resistance and supports. The consolidation is common after huge swinging moves. These consolidations are generally counter-trended in nature. The higher volatility may continue for another two days as the negative news flow settles down. As the weekly derivatives expiry on the cards, the volatility is imminent on Thursday. The rise in Open Interest on a declining day shows the shorts were built up. The Geopolitical tensions are still haunting the global markets as Russian troops continue to increase after one day pause. Technically, the Nifty is in a neutral zone. The lower minor swing highs show that a lot of strength is needed to become bullish. It has to close at least above the 17490. The 17150 level will act as crucial support for the next two days. Avoid aggressive positions on either side.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)