Markets remain directionless
During the last 3 days, the index has formed lower highs on the hourly chart; The opening of positive gaps did not sustain; The volumes have been declining for the last 2 weeks
Before the monthly expiry, NSE Nifty closed on the previous day close at 18118.30. The Auto stocks protected the market from a major decline. Maruti, Bajaj-Auto and Tata Motors have broken out of bullish patterns. Nifty IT index gained by 0.77 per cent, and the Media index is up by 0.41 per cent. FinNifty and FMCG also closed positively.
The PSU Bank index and the Realty index were the top losers, with 1.36 per cent and 1.01 per cent. The other sector indices ended in negative territory. The market breadth is negative as 1199 declines and 708 advances. About 53 stocks hit a new 52-week low, and 55 stocks traded in the upper circuit. HDFC Bank, Reliance and Axis Bank were the top trading counters today in terms of value.
The Nifty has formed a bearish engulfing candle before the monthly expiry day. After a Doji candle, this engulfing candle confirms the bearish implications. For the last four days, the Nifty has been trading above the 20DMA, but this mean moving average turned down again. It traded in the 18000-200 range. It moved mostly within the Monday range. This indecision is mainly because of event risk. During the last three days, the index has formed lower highs on the hourly chart. The opening of positive gaps did not sustain. It is still above the moving average ribbon. The hourly RSI has developed a serious negative divergence.
The daily RSI is hovering around 50. As mentioned earlier, the index may not break the 17760-18265 zone before the Budget. One thing is for sure, either side breakout will give a sharp move. As the index continued to trade in a range, It is better to avoid a directional trade on expiry day. The volumes have been declining for the last two weeks. The rollovers were well below the 3 and 6 months average, showing no conviction on the direction of the market. It is better to be neutral on the expiry day.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)