Nifty shows bearish dominance; IT sector unaffected

THE stock market tumbled with a record level of rising in Covid-19 cases and lockdown news. The negative news dented the sentiment. Before bouncing 178 points from the day's low, the Nifty tested the February 26 and March 18 lows. Finally, it lost 229.55 points and settled at 14,637.80. Barring IT and metal sector indices, all the sectoral indices closed negatively. The India VIX once rose by 15 per cent and settled at 21.2150 with 6.14 up. The banking, financial service, realty, and media indices were down by over three per cent. The advance-decline ratio is extremely negative, as there were 1,308 declines and 647 advances.

The Nifty failed to move above 14,880 levels and closed almost at last week's low. It also filled the last Tuesday's gap. Today's big bear candle eroded nearly all the gains of last week. As it failed to make a new minor swing high and oscillating around the 50DMA.

Currently, the Nifty is trading 1.02 per cent below the 50DMA and 1.13 per cent below the 20DMA. The 50DMA has flattened, and the 20DMA has been trending down since last month.

The Nifty exactly reacted from the anchored VWAP, which is plotted on lifetime high. As mentioned earlier, unless it moves above 14,880, the market may not get reasonable buying support. The elder impulse system has also given a fresh sell signal. As it closed below the 50 per cent of the day's range and closed below the three days' low, weakness is imminent.

Only a move above 14,800 will be a positive, and above 14,880 it can turn bullish. But, in case, the Nifty falls below today's low it will be big bears reign. The Nifty registered a distribution day, and the distribution day count is over six. It shows the current trend is under pressure. As mentioned yesterday, the 20 weekly moving averages of 14,319 will act as crucial short-term support.

— The writer is a financial journalist, technical analyst, and family fund manager