Nifty charts signal bearish confirmations

Domestic equities are able to outperform compared to global markets. The benchmark index, Nifty, closed at 17312.90 with 246 points or a 1.40 per cent decline. Only the FMCG index is up by 0.39 per cent. The Nifty IT is the top loser with 3.53 per cent. Bank Nifty, Fin Nifty, Metal, and Media indices are down by 1.5 per cent to 2 per cent. The Nifty Midcap-100 and Smallcap-100 indices are down by 0.83 per cent and 0.98 per cent, respectively. The India VIX spiked by 8.83 per cent. The market breadth is negative as 1318 declines and 591 advances. About 73 stocks hit a new 52-week high, and 106 stocks traded in the lower circuit. Reliance, Infosys, and SYRMA were the top trading counters on Monday in terms of value.

The benchmark indices opened with an over two per cent gap down with the Jackson Hole effect. With the FMCG stock's support, the Nifty traded above the opening lows. The Bank Nifty traded within the first hour's range. The Nifty finally closed below the previous week's low and also the 23.6 per cent retracement level (17329) of the prior uptrend. It closed 1.35 per cent below the 20DMA and took support at 34EMA. In fact, the Nifty outperformed compared to Global indices, only IT index declined sharply by 3.53 per cent. Only 11 of Nifty 50 stocks closed positively. It added another distribution day. The total distribution day count now is at 3. Any further increase towards 5 will change the market status to confirmed downtrend.

The leading indicators declined to a neutral zone from a strong bullish zone. The RSI is at 51.17 and back into the rising channel. The MACD histogram shows a sharp increase in the bearish momentum. The Elder impulse system again formed a bearish bar. The TSI and indicators have been in the bearish set-up. The 200 DMA (16975) support is just 1.99 per cent away. For today, the Nifty may consolidate above Monday's low. And the gap area will act as crucial for the next few days. Overall, technically the Nifty got the bearish confirmations. A move below 17164 will continue the negative bias. On the upside, 17550 will act as a crucial resistance.

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