MACD nearing zero line
In any case, if it closes below the zero line, we will see more downside; Better to stay away from fresh and long positions
The index escaped the distribution day as the volumes were lower than the previous day. Not a single sector or thematic indices closed positively on Tuesday, which is a signal for broader selling pressure. More volatile moves are on the cards in near term
The equities collapsed after a three-day interval. All the indices closed negatively as the selling pressure resumed. NSE Nifty declined by 238.25 points or 1.08 per cent and closed at 21,817.45 points. Nifty IT is the top loser with 2.90 per cent. The Media, Pharma, and FMCG indices closed with over 2.1 per cent declines. The Bank Nifty and FinNifty were the outperformers with less than 0.50 per cent declines. All other indices closed with 0.50-2.0 per cent declines. The India VIX is up by 1.57 per cent to 14.11. The market breadth is extremely negative as 1,851 declines and 749 advances. About 124 stocks traded in the lower circuit, and 40 stocks hit a new 52-week low. TCS, HDFC Bank, ICIC Bank, and Tata Steel were the top trading counters on Tuesday, in terms of value.
The Nifty broke the 17-day support zone. It closed at the lowest level after February 15. It decisively closed below the 10-week average and the 50DMA. After three days of resilience, the index closed below last Wednesday’s low, which means the inside price action gets the confirmation for the bearish implications. Nifty also broke the rounding top, which is bearish. The pattern target is 665 points, which is around 21,200, which is also near the major low of 21,137 points. The Index also closed below the 50 per cent retracement level of the January 24-March 11 move. As the index declined below the 50-DMA and prior lows, the immediate reasonable support is the 61.8 per cent retracement level of 21,667 points. Interestingly, the 23.6 per cent retracement level of the intermediate swing from the October 26th low is also at a similar level of 21,656 points.
The index also closed below the moving average ribbon. The MACD is approaching the zero line. In any case, if it closes below the zero line, we will see more downside. The RSI is decisively below the prior lows and near the bearish zone. The index escaped the distribution day as the volumes were lower than the previous day. Not a single sector or thematic indices closed positively on Tuesday, which is a signal for broader selling pressure. It is better to stay away from the fresh, long positions. More volatile moves are on the cards in near term.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
