Higher volatility likely on F&O expiry session
Nifty closed below the prior bar and formed another lower low candle; For 2nd day, it closed below the 5EMA
Our forecast on the market volatility and downside probability has become a reality. The benchmark index Nifty declined by 82.25 points or 0.44 per cent and settled at 18560.50 points. Only FMCG and the PSU Bank indices had gained by 0.96 per cent and 0.26 per cent, respectively. The Media, Realty, and Energy indices are down by over one per cent. The Nifty Auto, IT, Metal, and Pharma indices are also down by 0.50 per cent to 0.88 per cent.
All other sectors' indices are down with marginal losses. The market turned negative as 1211 declines and 703 advances. The broader market index, Nifty-500, has a negative breadth of 321 declines. About 78 stocks hit a new 52-week high, and 91 stocks traded in the upper circuit. ICICI Bank, Reliance and HDFC Bank were the top trading counters today in terms of value.
On a monetary policy day, the benchmark indices declined below the key supports. It closed below the prior bar and formed another lower low candle. For the second day, it closed below the 5EMA. However, it surpassed the previous day's high during the day, but was not sustained at higher levels. It also closed below the rising trendline support decisively. In fact, NSE Nifty has retraced more than 61.8 per cent of the previous week's rally.
The positive aspect, the index is not adding the distribution days in the current counter-trend of the last four days. After a long time, the index closed below the moving average ribbon along with the MACD line below the zero line on an hourly chart. Now, the index has the RSI closed just on the 40 support. The daily RSI declined below 60 and entered the neutral zone. It also closed below the upward channel, which is negative. The KST and the TSI indicators have given fresh sell signals. The 20DMA support is just 0.55 per cent away at 18459. The Nifty is now 3.91 per cent above the 50DMA, the 18442 level, which is a consolidation breakout, and the 20DMA will act as crucial supports for now. As the weekly expiry is scheduled, the volatility will increase further.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
