Nifty still hovering in directionless mode
The volumes were lowest in last 7 days, whereas MACD finally has given a sell signal; RSI is still in bullish zone with no momentum
image for illustrative purpose
NSE Nifty closed flat at 18,599 points, with a 5.15 points decline. Nifty was the top loser with 1.88 per cent and the top gainer is Nifty Realty with 1.19 per cent. The Nifty Pharma index is up by 0.61 per cent. All other indices are up or down by less than 0.50 per cent. The India VIX is up 2.18 per cent, but still at 11.38 level. The market breadth is positive as the advance-decline ratio is at 1.26. About 137 stocks hit a new 52-week high, and 90 stocks traded in the upper circuit. HDFC Bank, Mazadock, and Adani Enterprises were the top trading counter on Tuesday in terms of value. Ultratech Cement and Divis Labs were the top index gainers and TechM, Infosys were the top losers in the Nifty on Tuesday.
Smart recovery by cement and auto stocks lift the markets to the day’s high on Tuesday. With over 70 points recovery in the last hour, the Nifty was able to close in the positive territory. The bears failed to build momentum on the downside. Again a bearish candle, yesterday’s Shooting Star was unsuccessful in getting confirmation. In fact, all the day’s losses were wiped out in just 30 minutes. After a shooting star, the Nifty has formed another bearish or indecisive candle - Dragon fly Doji. The long lower shadow Doji candle indicates that the dip was used for buying.
Even the Bank Nifty has formed a Doji candle after a Gravestone Doji candle.
The market is completely indecisive on the direction. Volumes were lowest in the last seven days. The MACD finally has given a sell signal. The RSI is still in the bullish zone with no momentum. On Tuesday, the Nifty took support at 8EMA, as we expected on Monday. The 8EMA of 18,528 will act as immediate support. The formation on the top looks like a double too. For a breakdown, it must close below 18,464. For an upside to continue, the Nifty must move above 18,663. For the next two days, this range will be crucial. The Open interest is also flat for the day, indicating no momentum and dull market conditions. Stay cautiously optimistic.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
