Nifty forms perfect Doji candle
Sebi chairman’s comments on SMID stock valuations a caution for investors; It is advised not to buy low-float, illiquid stock from now on
Extremely Negative Mkt Breadth
- 2,175 declines
- 456 advances
- India VIX is down
- 396 stocks in lower circuit
- RSI is flat below the 60 zone
- 150 stocks hit a new 52-week low
- MACD is about to give a bearish signal
On a high-voltage volatile day and a series of negative news flows, the equity benchmark indices closed flat. NSE Nifty closed with just 3.05 points gain at 22,335.70 points. The Nifty IT is the top gainer on Tuesday with 0.64 per cent. FinNifty is up by 0.17 per cent and the private sector bank index is flat to positive by 0.04 per cent. All other sector indices were negative Tuesday. The Nifty Realty and PSU bank indices were the top losers with 3.71 per cent and 2.57 per cent, respectively. The CPSE and PSE indices are down by 1.53 per cent and 1.42 per cent. All other indices closed with 0.1 per cent to 1.5 per cent. The India VIX is down by 2.55 per cent to 13.63. The market breadth is extremely negative as 2,175 declines and 456 advances. About 396 stocks traded in the lower circuit, and 150 stocks hit a new 52-week low. HDFC Bank, JioFin, ICICI Bank, and Kotak Bank were the top trading counters on Tuesday, in terms of value.
The Nifty formed a perfect Doji candle. On an extremely negative breadth, four heavy-weight stocks, HDFC Bank, TCS, Reliance and Infosys, saved the market from a bigger fall. These four stocks contributed over 107 points on Tuesday. The Nifty breadth is negative as 37 stocks closed with declines. The higher volume than the previous day, shows more distribution was happened.
The Bollinger bands began to contract, indicating the consolidation and limited upside potential. For the second consecutive day, the index is below 8EMA. Now, the 20DMA support is just 0.68 per cent away at 21,198 points. It closed below the breakout level for the second day. The MACD is about to give a bearish signal. The RSI is flat below the 60 zone. The Stochastic RSI has given a bearish signal. As the index did not sustain above the breakout levels, it is not a good sign. It has not given a confirmed breakdown signal. If it closes below 22,224 points, we may see more selling pressure.
Since 17 January, the price structure has been very volatile, though it is making new highs. Small-caps and PSU stocks have given up gains and formed bearish patterns. These three segments have become multi-baggers in the last year. Profit is more in these stocks. Some of the micro-caps and SME stocks traded in the lower circuit on Tuesday. The Sebi chairman’s comments on these stock valuations are considered a caution. It is advised not to buy low-float, illiquid stock from now on.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
