Nifty ends below 200DMA for 2nd consecutive session

The equities collapsed to the new low with extremely negative breadth. The banks were the worst performers as the negative news flow the US. The benchmark index, Nifty, nosedived by 258.60 points or 1.49 per cent. The Bank Nifty was the top loser with 2.27 per cent, followed by the Auto index with 2.24 per cent. All the sector indices closed negatively. Nifty Energy outperformed by losing just 0.60 per cent. PSU Bank and private-sector bank indices are down by 2.87 per cent and 2.44 per cent respectively. Many of the sector indices declined by over 1.5 per cent, showing the bear’s grip on the market. The market breadth is very negative as 1,756 declines and just 213 advances. Only two stocks were able to close in positive territory. The Advance-Decline Ratio is just 0.21 per cent. About 158 stocks hit a new 52-week low, and 100 stocks traded in the lower circuit. HDFC Bank, Kotak Bank and TechM were the top trading counters today in terms of value.

The Nifty broke all meaningful supports and closed below the 200DMA for the second consecutive day. The positive opening gap proved a trap and declined sharply soon after the first-hour bar close. We suspected this kind of price action yesterday. The Nifty closed below the 28th February low or the prior swing lows. As it closed below 17255, the next level of support is at 16980, which is channel support. Before this, the 17035 may act as a support. The RSI declined below the 40 zone, and the MACD has given a fresh bearish signal. The -DMI is closed above the prior is an indication of bear domination. The weekly MACD declined below the zero line, showing a fresh breakdown. Weekly RSI is also the lowest since July 2022. The Nifty broke the 50-week average decisively and the slopping trendline support. The higher volume than the previous day validates the breakdown. As the index closed below the previous swing low, the status changed to a confirmed downtrend from Rally Attempt.

The Federal Reserve’s decision on the SVB Bank bailout is crucial for the global markets. The world’s banking sector feels potential contagion for other banks worldwide.

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