MACD About To Give A Bearish Signal

With the fresh round of Operation Sindoor strikes, the market traded nervous and declined sharply in the late Afternoon session. NSE Nifty declined sharply by 140.60 points or 0.58 per cent and closed at 24,273.80 points. Only IT and Media indices gained by 0.20 per cent. The Realty index is the top loser with 2.47 per cent. The Next Nifty, Consumption, Metal indices down by over two per cent. The Midcap, Healthcare, Auto, PSE, Pharma, and Energy indices down by over 1.5 per cent. The India VIX is up by 10.22 per cent to 21. The market breadth is negative as 2,027 declines and 820 advances. About 52 stocks hit a new 52-week low, and 73 stocks traded in the upper circuit.

BSE, HDFC Bank, Reliance, ICICI Bank, Tata Motors, and Kotak Bank were the top trading counters, in terms of value. The Nifty erased the previous day’s gain and closed lower and formed another bearish engulfing candle. It closed at the lowest point of the day. It also closed at the seven-day low. The index registered a distribution day, as the volumes were higher than the previous day by 0.55 per cent. Importantly, the index is still in the range, and failing to close above 24,400 even after several attempts. The momentum is waning fast. The MACD histogram is at the zero line. The MACD is about to give a bearish signal. The RSI is approaching the 60 zone and about to enter the neutral zone. The market has already discounted the geopolitical tensions. But the prolonged tensions will increase the volatility. The market is waiting for Pakistan’s response and its effects. The VIX rose by 8.72 per cent to 20.73, which is almost at the 7th April level, when the US tariffs were announced. On the weekly chart, the index is forming an inside bar. The weekly RSI has failed to move above the 60 zone. Overall, the market is nervous and trading in the range. Either it must close above the 24,400 zone decisively, or it must close below the psychological 24,000 level for a bearish breakdown. As the weekend is approaching, it is better to avoid building fresh positions.

(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)