Nifty Forms Indecisive Candle

The equities traded nervously with the escalation in geopolitical tensions. As the news flow erupted, the market was a bit anxious. NSE Nifty closed at 23,334.20 points with just a 1.75-point decline. A majority of the sectoral indices were down. The Realty is the top gainer with 1.54 per cent. Pharma and Healthcare indices gained moderately. The Media, PSU Bank, Micro-cap, and Small-cap indices decline by over two per cent. The Consumer Durables, Midcap, PSE, Energy, and Commodities indices are down by 1-2 per cent. The India VIX is up by 4.91 per cent to 18.23. The market breadth is negative as 2,228 declines and 631 advances. About 30 stocks hit a new 52-week low, and 81 stocks traded in the lower circuit. Reliance, Bajaj Finance, HDFC Bank, Mazdock, and SBI were the top trading counters on Wednesday, in terms of value.

The Nifty traded sideways and again traded mostly in the first hour’s range. It experienced a sharp decline in the last 15 minutes. The volumes suddenly spurted and recorded the highest in the last six days. The Nifty registered a distribution day. The index has formed a lower high and lower low candle, and a Doji candle. It has been struggling to surpass the 24,370 zone of resistance for the past six days. The RSI is flat, and the negative divergence is still valid. The indecisive moves are common after an impulsive move. Normally, in a consolidation, the price forms a flag or pennant pattern. The MACD shows further decline in the bullish momentum. The RSI is approaching the 60 zone, and it is flat as the index has traded in the range for the last two days. The Nifty formed an indecisive candle, and a negative close will confirm the reversal. For an upside move, the index must close above 24,375 with a strong bull candle and high volume. On the downside, with a negative close, the index may test the 24,129, which is the 8EMA and the prior breakout level. Below, the 23.6 per cent retracement level is at 23,817 points, which is the next meaningful support. For now, stay cautious on both sides.

(The author is partner,

Wealocity Analytics,

Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)