MACD Gives Fresh Bearish Signal

The equity markets across the world nosedived and registered a Black Monday with deeper cuts. The domestic market declined sharply lower and registered a big fall after March 2020. NSE Nifty is declined by 742.8 points or 3.24 per cent and closed at 22161.60. All the sectoral indices declined by 1-6 per cent. The Metal index is top loser with 6.75 per cent, followed by Realty index with 5.69 per cent. The Microcap index is down by 4.33 per cent. The Smallcap, Commodities, Auto, Media, Midcap, FinNifty, Infra, and Private Ban indices declined by over three per cent. The market breadth is extremely negative as 2,640 declines and 327 advances. About 645 stocks hit a new 52-week low, and 384 stocks traded in the lower circuit. Trent, HDFC Bank, Infosys, Tata Motors, and Reliance were the top trading counters in terms of value.

The markets are gripped by fear due to the effects of tariffs and a global recession. As we expected, the Nifty made a lower low at 21,743.65. The Volatility index India VIX is up by 65.76 per cent to 22.83, which is the highest level after June 2024. The Nifty traded within the first hour’s range and closed above the 22,000 points. The Massive volume recorded a 3.46 per cent decline day, and the index registered a distribution day. The Nifty recovered over 223 points in the last two hours of trading. FMCG companies Hindustan Unilever and Britannia helped the recovery. The Nifty closed almost at the day’s high. However, the price structure is deeply damaged as the index made a lower low with a massive gap. The RSI is below the 40 zone in daily and weekly timeframes. The MACD has given a fresh, bearish signal in all time frames. Now, the index retraced 23.6 per cent of the current downswing from 23,869 to 22,254. It may be difficult to fill the gap in the near term by testing 22,857. A close above 22,245 may touch the 22,555 zone. But, on the downside, a move below today’s low will test the 21,281, which is the 4th June low. As the index resumed the downtrend with a big move expect every bounce will attract fresh selling pressure. The news will dominate for the next few days. Wait for a confirmed reversal sign to take fresh, long positions or to exit the current short positions.

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