Nifty making lower highs, lower lows

The BSE Sensex touched a new life-time high, and the Nifty was also almost there. But the market failed to sustain the opening gains. Finally, the NSE Nifty closed with 26.25 points at 15,772.75 points. The BSE Sensex closed flat at 52,588.71 points with 14.35 points gain after hitting the life-time high of 53,057 points. The auto index recovered 1.34 per cent on Tuesday. IT and Smallcap indices up by half a per cent. Bank Nifty, FinNifty and Realty indices down by half a per cent. All other indices either up or down by less than half a per cent. The market breadth is positive as 1,207 advances and 792 declines.

As suspected on Monday, the NSE Nifty' moves are suspicious before the June monthly derivatives expiry. Another gap-up opening did not sustain, and it filled the gap by the end of the day itself. It almost tested the previous high with just six points away and broke the channel resistance in the first hour. But later, it made lower highs and lower lows throughout the day closed at the day's low. The Nifty closed in the positive territory, but the follow-through day is not strong enough to continue. The Nifty took support at very short-term moving average- 5EMA. The momentum is not at all positive side. It erased over 100 points from day's high. Let us assume that the 15,902 points is a visible resistance for now. A close below the 15,750 points will show a weaker sign again. The VIX is back to below 15 levels and declined another 2.14 per cent on Tuesday. The index is breadth is positive, and the rollovers are below the three and six-month average at less than 36 per cent. It shows the lack of conviction on the trend. The 20DMA support moved higher to 15,588 points. The volatility and the daily range increase further because of derivatives expiry.

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