Bearish momentum persists on Nifty

The Nifty closed where it opened this week. It recovered all the losses made on Monday. The VIX further declined to below 20 levels. Barring IT, Media, Realty all other sectors took part in the rally today. The Nifty was up by 148.15 points or 1.09 per cent and closed at 13,749.25. The Banks and Financial services index rose by 1.8 per cent each. Pharma was up 1.22 per cent and Energy index rose by 1.4 per cent. The market breadth is positive as 1,090 stocks gained, and 795 stocks declined. As many as 117 stocks hit new 52 weeks high today.

The Nifty moved higher by another one per cent for third consecutive day and retraced 100 per cent of the Monday's manic fall. It took three days to reclaim 13,750 levels. As it closed at weekly opening level, it formed a long lower shadow candle, Dragonfly Doji. Generally, this candlestick pattern is a bearish signal. But the recent experience of long lower shadows shows a buying interest almost every time.

In any case, the Nifty closes above 13,780 for two consecutive days or weekly close is a fresh breakout and positive for the market direction. The Nifty took support at eight weeks exponential moving average. The Nifty lost just 11 points on a weekly basis. Though it closed at last Friday closing level, the indicators did not move much. As mentioned yesterday, the technical structure of the market did not change much after Monday.

The MACD histogram is still in the negative shows the presence of the bearish momentum. The RSI also failed to move above 70 zone. The derivative data indicates the decline in open interest over one per cent gain today. It is also indicating the unwinding positions in the market. The rollovers are at 25.16, with still four days to go for an expiry. As the rollovers are above the three and six months average, the Market trend may continue till the expiry. Now the support level has inched up to 13,585 and 13,617 zone. Only a move below this level will give us weak signals. Till then continue with the trend.

(The author is a financial journalist, technical analyst, trainer, family fund manager)