MACD Indicates Fresh Bearish Signal

In a narrow trading range day, the benchmark indices closed flat. The Nifty went up by just 7.45 points or 0.03 per cent and closed at 24335.96. The Nifty IT is the top gainer with 1.23 per cent. The Consumer Durables gained by 0.62 per cent. The Pharma index was the top loser with 1.06 per cent. The Metal, Healthcare, Media, and Commodities indices declined by over 0.50 per cent. All other sectoral indices gained or lost by less than half a per cent. The India VIX is up by 2.38 per cent to 17.35. The market breadth is negative as 1478 declines and 1365 advances. About 33 stocks hit a new 52-week high, and 78 stocks traded in the upper circuit limit. Reliance, Mazdoc, GRSE, Tata Tech, and BSE were the top trading counters in terms of value.

The Nifty closed flat after a volatile first hour. The Reliance again protected the Nifty from a negative close, as it contributed 45 points to the index. The Breadth is negative. The Nifty moved above 24365 in the first and broke the last four-day range. But, it did not sustain at the higher level, and formed a shooting star candle. On a negative closing day, it closed below the opening level and near the day’s low. The higher volume indicates distribution. But, it escaped the distribution day, as the decline is limited to 0.03 per cent. The index is trading within the range. A decisive close on either side will result in a sharp move. The RSI formed a negative divergence. The hourly RSI declined into the neutral zone, and the MACD has given a fresh bearish signal. The index traded in the first hour’s range. As the index is not giving any clues about the directional bias, it is better to stay with a neutral bias. The banks and financial services stocks cooling off after a big rally is negative. If the Reliance stocks experience a profit booking, it will add to the selling pressure in the broader market. So, it is better for either side breakout for a directional bias to take the positions.

The Nifty closed flat after a volatile first hour. The Reliance again protected the Nifty from a negative close, as it contributed 45 points to the index. The Breadth is negative. The Nifty moved above 24365 in the first and broke the last four-day range. But, it did not sustain at the higher level, and formed a shooting star candle. On a negative closing day, it closed below the opening level and near the day’s low. The higher volume indicates distribution. But, it escaped the distribution day, as the decline is limited to 0.03 per cent. The index is trading within the range. A decisive close on either side will result in a sharp move. The RSI formed a negative divergence. The hourly RSI declined into the neutral zone, and the MACD has given a fresh bearish signal. The index traded in the first hour’s range. As the index is not giving any clues about the directional bias, it is better to stay with a neutral bias. The banks and financial services stocks cooling off after a big rally is negative. If the Reliance stocks experience a profit booking, it will add to the selling pressure in the broader market. So, it is better for either side breakout for a directional bias to take the positions.

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