Now, 25078-83 is a crucial support. In any case, if it closes below this support, the market will see a significant fall. Strictly keep a stop loss at 25078. On upside, the index must close above previous week’s high of 25268 to continue bullish bias

The weaker global markets dented sentiments in the domestic market. The Nifty opened with a huge gap down and finally ended with an 81.15-point, 0.35-percent decline, closing at 2598.70. The Healthcare and Pharma indices were the top gainers, with 0.82 per cent and 0.74 per cent, respectively. The Realty is up by 0.65 per cent, and FMCG gained by 0.41 per cent. On the flipside, the PSU Bank index is the top loser with 1.69 per cent, followed by CPSE with 1.30 per cent. The IT, PSE, Private Bank, and Energy indices down by over 0.56 per cent. The India VIX is up by 3.86 per cent to 14.38. The market breadth is negative as 1459 declines and 1264 advances. About 152 stocks hit a new 52-week high, and 105 stocks traded in the upper circuit. Mazdock, HDFC Bank, Reliance, and ICICI Bank were the top trading counters on Wednesday, in terms of value.

The Nifty recovered from the opening lows. It opened with a 190-point gap down and below the 8EMA. As the fall is 0.30 per cent with a higher volume than the previous day, the index has registered a distribution day. The index and broader market breadth are also negative. Importantly, the Nifty closed at the three-day low. Though the index has formed a bullish candle, the above factors are not giving confidence for fresh longs. HDFC Bank, Asian Paints, and Hindustan Unilever led the recovery. Interestingly, the daily and weekly RSI are developing a bearish divergence, which is the first alert for the uptrend. The index opened at the prior breakout level and took support. Now, 25078-83 is a crucial support. In any case, if it closes below this support, the market will see a significant fall. This support has to be protected on a weekly basis, too. After three indecisive and bearish candles, Wednesday’s fall is definitely a caution on the long positions. Strictly keep a stop loss at 25078. On the upside, the index must close above the previous week’s high of 25268 to continue the bullish bias. As we forecast, the index is giving weaker signals, and it is better to avoid the fresh long positions.

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