Market breadth turns negative, trade with caution

The December series has ended on a dull note. The series lost just 113 points even after big volatile days. The Nifty declined just 9.65 points after a 120 points intraday move. The index is able to protect the 17200 level. The Nifty IT index is the top gainer with one per cent and followed by Pharma index with 0.44 per cent. The FMCG, Banknifty and Smallcap-100 indices closed with marginal gains. The Metal index is declined by 1.17 per cent, and the Energy index down by 1.14 per cent. Overall market breadth is negative as 1050 declines and 984 advances. About 128 stocks hit a new 52 week high, and 164 stocks traded in the upper circuit. There are 86 bulk deals that happened today.

The benchmark index was traded in a very narrow range for the last two days. It is one of the dullest expiries because of FIIs absence. The Nifty has formed two consecutive doji candles, traded 20DMA as support for the last three days. Even on the 75-minute chart, it has formed doji at the end of the day. The 20DMA started its curving down. On a monthly chart, it formed a long-legged doji candle. The Stochastic oscillator is giving a signal that the counter-trend is in the matured stage. An uptick in the -DMI will give a confirmation, as it is already above the +DMI and ADX. The frontline index's relative strength is lower than the broader index, the Nifty-500. The RSI shows a hidden divergence, as it formed a parallel top around 50 zone. In any case, the Nifty trades below the 17146-161 zone support, which is last three days low. Even though the market closed on a flat note, the breadth is negative, which is another weak sign. Importantly, the Nifty has formed lower high and lower low bars, is a weak signal. The IT, Pharma sectors successive rallies protected the market from a decline. As the benchmarks indices trading in a narrow range, the momentum has completely waned, and any fresh selling pressure may give strength to the bears.