Nifty forms most bearish candle
Its open is high and close is low; Even though positive aspects exist, they did not given any confidence to bulls to go with long trades; Currently, there are no weaker signs, but the index consolidates within the range
On another dull day, the benchmark and sectoral indices ended on a flat note. NSE Nifty gained just 23.05 points and closed at 18,267.25. The Media and PSU Banks were the top gainers, with 1.14 per cent and 1.02 per cent, respectively. The Metal index was down by 0.40 per cent and the IT declined by 0.14 per cent. All other sector indices are advanced by 0.1 per cent to 0.64 per cent. The VIX is up by 1.44 per cent. The Implied Volatility (IV) is further down to 12.5 per cent, which is a year low. The Market breadth is positive as 1,062 advances and 840 declines. About 60 stocks hit a new 52-week high, and 73 stocks traded in the upper circuit. Mazdock, PNB, and Adani enterprises were the top trading counter on Wednesday in terms of value.
The Nifty has formed the most bearish candle, as its open is high and close is low. It opened with the most positive, not with 81 point gap up, but drifted down sharply in the first hour. In the last hour, it erased all the intraday gains. But, it closed above the previous day and the last two days high. And it also closed above the 5EMA. Even on the hourly chart, the index sustained above the moving average ribbon. These positive aspects have not given the confidence to the bulls to go with long trades. As mentioned earlier, the 18,114-443 has to be cleared on either side for a decisive directional trade. There are no weaker signs currently. The index is consolidating in the range. It has broken the rising trend line support, but, is still above the short-term averages, which indicates the trend is not yet reversing.
On monthly expiry events, the market behaviour is typically different from the recent past. Because of the low IV, the premiums are not attractive. The options sellers made little money, and the buyers were under a trap. The rollovers were significantly lower than the three and six month average. These derivatives data may lead to unexpected moves tomorrow on the expiry. Due to sideways and low volatile moves, expect the unexpected in the next few days.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)