Nifty Still Hovering In Neutral Zone

The domestic equities traded in a subdued session on Wednesday with low volume and a narrow range. NSE Nifty declined by 136.70 points or 0.61 per cent and closed at 22,399.15 points. The Nifty FMCG index is the top gainer by 1.78 per cent. The Consumer Durable, Consumption, and Auto indices ended green. All other sector indices closed negative. The PSU Bank index is the top loser by 2.52 per cent, and IT was down by 2.19 per cent.

The Pharma, Realty, Metal, Microcap, and Healthcare indices are down by over one per cent. The volatility index India VIX is up by 4.83 per cent to 21.43. The market breadth is negative as 1,747 declines and 1,083 declines. About 45 stocks hit a new 52-week low, and 80 stocks traded in the upper circuit.

The Nifty has formed an inside bar, as expected. The volumes further declined on an event day (RBI Monetary policy) and weekly derivatives expiry. On a positive policy day (interest rate cut), the Nifty and Bank Nifty closed negatively. Interestingly, it traded in a very narrow range. Open Interest data shows fresh short positions were built.

The index closed below the 23.6 per cent retracement level of the previous two-day move. The RSI is hovering around the 40 zone, any decline below this will give weaker signals. In any case, if the Nifty declines below the 22,333-314 support zone, it can test 22,108 and 21,964. On the upside, the index must close above 22,472 and cross the Tuesday high of 22,697. Otherwise, expect the consolidation. The Nifty is still in the neutral zone and has the potential to decline into the oversold zone. The global markets reached an oversold condition and expect a bounce in the near term. Watch the news flow and global markets. Let the dust to settle down to take a directional call.