Volatility may further rise ahead of Aug F&O expiry
Closed below 13EMA and confirms Friday's Engulfing candle’s bearish implications; After 2 days of sharp decline, the RSI closed in the 60 zone; The MACD has given a fresh sell signal
image for illustrative purpose
Domestic equities ended sharply lower on the intensified profit booking. NSE Nifty ended at 17,490.70 with 267.7 points or a 1.51 per cent decline. All the sectoral indices closed lower. The Metal and Realty indices declined over 2.5 per cent each. The Midcap-100 and PSU Bank indices are down by over two per cent. Barring FMCG, all the sector indices are down by 1-1.7 per cent. FMCG index is down by 0.13 per cent. As expected, the VIX is up by 4.12 per cent. The market breadth is extremely negative as 1,408 declines and 497 advances. About 63 stocks hit a new 52-week high and 87 stocks traded in the upper circuit.
The Nifty continued its violent fall for the second day. It declined 465 points or 2.6 per cent in just two days. Closed below 13EMA and confirmed Friday's Engulfing candle's bearish implications. After two days of sharp decline, the RSI closed at the prior low and just in the 60 zone. The MACD has given a fresh sell signal. All the intraday recovery efforts were sold into. Importantly, as the Nifty opened and closed below the prior week's low, it also confirmed the last week's shooting star candle's bearish implications too.
The breadth is extremely negative and added another distribution day. The index filled the 10th of August gap today. Currently, the Nifty is just 0.87 per cent above the 20DMA. For the first time after the 14th of July, the Elder impulse system has formed a bearish bar. The TSI has also given the first bearish signal. KST is about to give a fresh sell signal. As we expected yesterday, the Nifty has almost confirmed that the 17992 is an intermediate top. The 23.6 per cent retracement support is at 17329, which is just at arm's length. As the monthly expiry is scheduled in the next three days, the volatility may further increase. From now, every pullback effort may get sold as long as it trades below Friday's high.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
