Nifty Forms Shooting Star Doji On Weekly Chart

The benchmark indices traded subdued on the last day of the financial year. NSE Nifty gained declined by 72.60 points or 0.31 per cent and closed at 23,519.35 points. The Nifty gained 1,192.45 points, or 5.34 per cent, in the financial year. The Nifty gained 6.30 per cent in March and ended a five-month losing streak. The BSE Sensex gained by 0.66 per cent last week. The Nifty Midcap-100 and Smallcap-100 declined by 0.34 per cent and 0.55 per cent, respectively. The FinNifty is the top gainer with 2.06 per cent, followed by Bank Nifty 1.92 per cent. The FMCG and IT indices advance by 1.14 per cent and 0.50 per cent. Nifty Media is down by 4.68 per cent, and Pharma declined by 2.26 per cent. The Auto and consumer Durable indices are down by 2.12 per cent and 1.65 per cent. The Market breadth is mostly positive. The India VIX is almost flat at 12.71. The FIIs aggressively bought equities in the last week of the financial year. They bought Rs2,014.18 crore worth of equities in this month. The DIIs bought Rs37,585.68 crore worth of equities.

It formed an outside bar on a monthly chart, and on a weekly chart, the Index has formed a Shooting Star Doji candle, also known as a Gravestone Doji candle, which is a negative signal for a trending market. The Nifty faced resistance at the 50-week average and fell. This long-term average has previously acted as both support and resistance. As stated earlier, The Nifty tested the previous high and formed a lower high on a line chart. For a trend reversal, it is necessary to form a decisive higher high and higher low. The five days of price action are in a range and form a Doji candle.

The Global markets collapsed on Friday after our market closed, as the tariff schedule is nearing. Monday is a holiday for our market. So, expect the next two days of price to be neutral to negative unless there is a clear signal that India will not be affected by the tariffs. On Wednesday, post-market hours, the tariffs will go into effect. So, expect any reaction on Thursday. Expect a gap-down opening on Tuesday and trade in a range.

In the last trading session, the Index traded volatile and closed on a negative note. The Index erased the gains made the previous day. The Volumes were very thin, recording almost half of the previous trading session. The reason for closing positively in the month is that the fund houses and FPIs managed the Index during March to sustain the NAVs and tax harvesting. As the Index has formed almost an inside bar, there is no change in directional bias. In any case, if the Nifty closes below 23,402 points, it will fill last Monday’s gap area and become negative, potentially testing the 50 DMA at 23,002 points. The 23.6 per cent retracement level of the prior upswing is at 23,420 points. Below this immediate support zone, the Index may continue the downtrend towards 23,000 points. It all depends on how the global market fares from now onwards.

The Relative Rotation Graphs (RRG) show that there has not been much change in the sectoral setup. The Metal, Bank Nifty, Private and PSU Banks, and FinNifty are placed in the leading quadrant and may outperform compared to Nifty-500. The Oil and Gas, FMCG, and Auto indices are in the improving quadrant but are losing momentum. Watch these sectors; any improvement in momentum will lead to outperformance. All other sectors are not in a position to lead the market; avoid them.

A series of event risks are scheduled for next week, including Trump tariffs and annual earnings. Stay cautiously in neutral for now. A close below the previous day’s low will be negative. Maintain strict financial management principles to safeguard profits and capital.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)