Range-bound movement may continue

In a reduced daily range to 208 points, the benchmark indices closed flat to negative, not on a weekly expiry day. NSE Nifty closed at 17610.40 with just 5.90 points decline. The Nifty FMCG and IT indices were the top gainers, with 2.28 per cent and 1.83 per cent, respectively. The Media, Realty, Bank Nifty and Auto indices also closed positively. The Metal index continued to decline sharply by 4.35 per cent, which is the top loser. FinNifty, Pharma, and Infra indices are down by less than half a per cent. The VIX is down by 6.24 per cent to 15.73. The Market breadth is negative as 1051 declines and 879 advances. About 116 stocks hit a new 52-week low, and 76 stocks traded in the lower circuit. Adani Enterprises, Adani Ports and Ambuja Cements were the top trading counters today in terms of value.

The Nifty has formed an inside bar, as we expected on Wednesday. It closed flat to negative in the lower intraday range. On a weekly expiry day, the volatility is low as the event risk over. The Nifty is still trading below the short-term averages of 5 and 8EMAs. Currently, it is trading just 1.80 per cent above the 200DMA. Today's price action is also limited to the first hour's range only. The momentum has waned. This kind of sideways and range-bound movement may continue for another day.

The weekly candle is forming in a strongly bearish mode. Even though the index closed flat, the breadth is negative and shows inherent weakness. The 5EMA is at 17676, and the 8EMA is at 17740, which will act as immediate resistance. On the downside, the Budget day low of 17353 and the 200DMA 17293 zone will act as a crucial zone. The four-week indecisive zone was broken last week and still trading below the breakdown level. For at least another two weeks, 20DMA (17905) and the 200DMA (17293) zone may not break so easily.

There may be some short covering bounce may in due course. Overall, market breadth is not yet improved. The RSI is below the 40 zone, and the MACD shows bearish momentum. The weekly Elder impulse system has formed a second consecutive bearish bar. KST and the TSI indicators are in the bearish setup. For the last four days, the Anchored VWAP has been acting as support on a closing basis and is currently at 17462. A close below this will be negative for the market.

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