Higher India VIX a cause of concern
Nifty moved above the 8EMA, but failed to close above this short-term average; The volume was much lower in last 13 days
The Nifty took 3 days to erase last Thursday’s losses. It moved above the 8EMA, but failed to close above this short-term average. The volume was much lower in the last 13 days
The equities rallied further towards the key resistance levels. Led by Reliance and L&T, the benchmark indices closed positively. NSE Nifty gained by 113.80 points or 0.51 per cent. The Metal index is the top gainer with 2.77 per cent, followed by CPSE with 2.07 per cent. The PSE, Auto, and Smallcap indices gained by over 1.5 per cent. Only Pharma and FMCG indices were negative by 0.41 per cent and 0.52 per cent. The India VIX is at 20.19, up, declined by 1.97 per cent. The market breadth is positive as 1,967 advances and 637 declines. About 79 stocks hit a new high, and 194 stocks traded in the upper circuit. Zomato, HDFC Bank, Adani Enterprises, and Cochin Shipyard were the top trading counters on Tuesday, in terms of value.
The Index continued its positive momentum for the third successive day. It moved above the 8EMA, but failed to close above this short-term average. The volume was much lower in the last 13 days. The Nifty took three days to erase last Thursday’s losses. It closed above the 38.2 per cent retracement level of the prior fall. It is 0.34 per cent below the 50DMA and 0.44 per cent below the 20DMA. This 22,223-22,297 zone of resistance is critical for an upside move. As mentioned earlier, the positive divergence in hourly RSI worked out well. But it gets rejected at 80, zone which is an overbought zone. As stated earlier, the 22,400-21,700 zone is very critical for the next three weeks.
Interestingly, the India VIX cooled off by 1.97 per cent on Tuesday, but still at a higher level. The VIX or volatility is a concern for now. Let us watch the index behaviour around 22,300 points, a price pattern at this will give us the clue about the directional bias for next week. The volume pickup is very important to continue the momentum on the upside. For Tuesday’s low, the 22,081 level is the immediate support, and 22,300 level is the resistance. Stay with a very thin position size.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
