MACD shows increased bearish momentum

The equity benchmark indices closed positively, near the previous day's high. NSE Nifty gained by 84.25 points or 0.46 per cent and settled at 18,244.20. All the major sectoral indices closed with marginal gains. The Nifty Realty was down by 1.22 per cent, and the Energy index declined by 0.35 per cent. The PSU Bank index is the top gainer with 1.66 per cent. The Nifty Metal and IT indices gained by 0.89 per cent and 0.81 per cent, respectively. All other sectoral indices advanced by 0.1 to 0.6 per cent. The market breadth is positive as 1,021 advances and 880 declines. About 67 stocks hit a new 52-week low, and 66 stocks traded in the upper circuit. Mazdock, Kaynes, and PayTM were the top trading counters in terms of value on Tuesday.

The market was reluctant to fall from the support. The Nifty has formed another inside bar on a lower volume. Yesterday, it registered a distribution day, but bears were unsuccessful in continuing the momentum on the downside. Except for the opening and closing hours, literally, there is no activity. The volume dried up. Before the monthly expiry, the last two days of trade activity is on a low volatility, surprisingly. The VIX is down by 6.45 per cent. The Implied Volatility also declined sharply to the lowest level of 16.31. This trend is not seen in the last year. Currently, the rollovers are below the six months average.

The Nifty closed below the 5EMA for the third consecutive day. It has not given any fresh technical signals. The index is still below the rising channel support. The MACD histogram increased further and shows an increased bearish momentum is intact. As mentioned earlier, the 18,114 support has to break for a weaker signal. In any case, the Nifty closes above 18,262 will be a positive for the market. The following two days' behavior of the market will be crucial for a decisive trade and trend. For now, wait for the first bar to close. If it trades above the first-hour bar high, be with a positive bias. We will get short opportunities only below 18,114. Until then, avoid taking short positions.

(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)