Nifty breaks falling streak, yet investors need to be cautious

The Indian stock market took a breather after five days of a consecutive losing streak. The Nifty gained 31.10 points and closed at 14,707.80. But it failed to sustain the positive opening strength. BFSI sector stocks were the laggards in today's market. Bank Nifty and FinNifty closed with less than half per cent loss. Metal stocks shined as the copper prices hit new highs. PSU stocks were also in the limelight. Most of the sectoral indices advanced by an average of half per cent. India VIX still was above 25 zones, and with sideways activity in the afternoon session, it cooled off by one per cent. The overall market breadth was positive as 1,142 advances and 756 declines were recorded. Mid and Small caps outperformed once again.

The Nifty formed an inside bar on Yo-Yo moments a day. It oscillated in the 200 point range, with small bouts of buying and selling interests. It opened with a 100 points gap up and managed initial gains till afternoon. The underperformance of the BFSI sector pulled down the benchmark index. As the monthly expiry is just two more sessions away, the rollover activity has picked up. With this, the Nifty and the Banknifty traded in a very tight range after initial volatility.

The efforts of moving above the 20DMA were unsuccessful. As long as Nifty trades within Monday's range of 15,010–14,635, it may consolidate for longer time. As February series is expiring this Thursday, it is difficult to predict the price movement. It may move in sideways with higher volatility. The FII turned sellers on Monday because of rising bond yields in the US. In any case, the Nifty fails to move above the 15,000 levels by this weekend, the last week's bearish engulfing will get the confirmation.

As it sustained below the 20DMA and 5 and 8EMAs, these will act as resistance for Wednesday. A move above the 14,881 will give some positive cues for the near term. The Nifty ended its five days losing streaks, but closed below the opening level is a concern for now and the 14,635-14,651 zone will act as support, and any move below this will give more strength to the bears.

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