Market set to remain flat during the week on profit booking

INDIAN stock market ended on a flat note after a highly volatile session. Profit booking caused the sudden sell-off in the BFSI sectors resulting in halt for a marathon rally. Reliance and Metal sector limited the losses in the benchmark index. With an almost 100 point recovery from the day's low, the Nifty closed at 15,313.45 with just 1.25 points loss.

The Banknifty and FinNifty closed with half a percentage of loss. The Nifty IT index has 1.49 per cent. The market breadth was negative as 1,056 declines and 829 advances were recorded, whereas 348 stocks closed unchanged.

Dalal Street witnessed the profit booking after reaching another new high. After opening at a gap up, it fell sharply below the opening level and tested the previous day's low. A 200 point move on a high volatile note triggered a caution for the bulls. It formed a long-legged small body candle.

With today's volatility, it will challenge task to take positions on either side. Though it tested the previous day low, it did not close below the previous day low and did not give any bearish or reversal confirmation. Today's bar is also an outside bar, which is generally a reversal sign. The negative divergence in RSI on 75 minutes chart is clearly visible with today's fall.

After a massive move in the Banking and Financial services sectors, they retraced about half a percentage. With increased volatility and negative market breadth, it is time to be cautious about the direction. Even for the next two days, 15,246 will act as a significant support for now.

Unless the Nifty closes below this level, we may not get the confirmations. On an hourly chart, the pullback efforts failed to close above the previous bar signalling the weakness. Even the last hour short-covering pullback also was unable to close above the previous bar. On the 75 minute chart, the MACD gave a sell signal. The positive momentum indicator +DMI was above the -DMI and ADX showed some strength in the index. For the three days this week, the Nifty may consolidate between 15,431 and 15,213 levels. This 200 point range will act as critical in the short term direction. We may experience high volatility in this range.

(The author is a financial journalist, technical analyst, trainer, family fund manager)