Slash your leveraged positions for now

In the absence of global market indications, the domestic benchmark indices bounced from the oversold condition to a lower timeframe. NSE Nifty was up by 207.80 points or 1.17 per cent and closed at 18,014.60 points. The PSU Bank index is the top gainer with 7.29 per cent. The BFSI and Metals led the market to bounce on Monday. Bank Nifty and the Metal indices are up by 2.31 per cent and 2.19 per cent. The Media, Realty, and Energy indices also advanced by over two per cent. Only the Pharma index was down by 0.84 per cent. The broader market indices, Nifty Smallcap-100, gained by 3.81 per cent and the Midcap-100 is up by 2.72 per cent. The VIX is down 1.41 per cent. The market breadth is positive as 1743 advances and 232 declines. About 136 stocks hit a new 52-week high, and 176 stocks traded in the upper circuit. Yes Bank, PNB, and Kotak Bank were the top trading counters today in terms of value.

The Nifty has bounced and filled the last Friday's gap as we expected. The bounce with low volume is a concern in a strong bearish mood. This reasonable, technical bounce before the monthly expiry is common. The Nifty tested the 38.2 per cent retracement level of the last three days' fall. It also faced resistance at 5EMA. The last hour's profit booking with a higher volume is raising doubts about sustaining the bounce. For the last two days, the Nifty has been taking support at 50 per cent of the current downswing and the 100DMA.

This is the only major technical development that occurred today. The 17774 will be a crucial support for now. After a sharp decline, a counter-trend consolidation is common. On the upside, the 18084-138 zone is very crucial for the bounce to sustain. On the upside, there are multiple resistances placed. The prior swing low of 18138 is immediate resistance. The 8EMA is at 18174, and the 50DMA and the 38.2 per cent retracement level of the current fall are at 18200. For a reasonable bullish bias, the index has to clear all these resistances. In any case, the Nifty clears these hurdles, and the target is at 20DMA of 18464. As stated yesterday, the 17774-18400 is the broad range for Nifty in the coming days. Stay cautious and reduce the leveraged positions.

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