D-st jitters: Nifty may enter counter-trend consolidation
Fall of over 5% in just 6 days is impulsive; It may retrace at least 38.2% of the current fall, which means the benchmark index may bounce back towards 19,227 points if there is no negative news flow
Above-average volume is an indication of massive selling pressure; It clocks the highest volume after September 28
In Just 2 Hours
• Key indices tanked in first 2 hours
• Later, Nifty traded in the tight zone, which is an indication that a short-term low was formed at 18,843 points
• Nifty holds 8 distribution days
• It closed below 150DMA
• Nifty trading just 1.35% above 200DMA
• Daily RSI also declined below the 27
• Nifty declined by 6.68% from its all-time high
• Fear gauge at historical low for prolonged period
The domestic market witnessed another worse day. NSE Nifty declined by over percentage points. The last six days of the nosedive move have met its target by testing prior major highs and testing the 28th June gap. It also retraced the 38.2 per cent retracement level of the prior uptrend. The above-average volume is an indication of massive selling pressure. It clocks the highest volume after 28th September.
Now, the Nifty holds eight distribution days. It closed below the 150DMA, trading just 1.35 per cent above the 200DMA. The daily RSI also declined below the 27. The Nifty declined by 6.68 per cent from its all-time high, which is more than the prior decline. We are cautioning about this kind of sharp decline as the VIX is at a historical low for a prolonged period. The market finds value in the market at a certain point in time, and technically, a flat base will form. Till then, all the pullbacks will attract more selling pressure.
The index may enter counter-trend consolidation as the fall of over five per cent in just six days is impulsive. It may retrace at least 38.2 per cent of the current fall, which means the Nifty may bounce towards 19,227 points if there is no negative news flow. Today, after the first two hours of fall, the Nifty traded in the tight zone, which is an indication that a short-term low was formed at 18,843 points. The 26th June low of 18,646 is the strong support. Keep profit booking wherever possible.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
