Nifty forms Shooting Star on weekly chart
NSE benchmark closed on 50-week avg support though volumes were lower than previous day; As market is nervous at higher levels, with a clear bearish signal, it is better to avoid taking fresh long positions
A close below 23,888-742 will be negative, and it can test the next support of 23,360. Below this, the Nifty may test 23,051, which has higher probability. On the upside, a close above 24,365 is needed to resume the uptrend
Tensions on the Indo-Pak border dented the sentiment on Friday. The equities declined sharply. NSE Nifty declined by 207.35 points or 0.86 per cent and closed at 24,039.35. Only IT index is positive by 0.72 per cent. All other sectoral indices declined by 0.62 per cent to 3.24 per cent. The Media is a top loser. The Realty, Microcap, PSE, Midcap, Smallcap indices declined by over 2.5 per cent. The Healthcare, Pharma, PSU Bank, Energy, CPSE, and Metal indices are down by over two per cent. The India VIX is up by 5.58 per cent. The market breadth is negative as 2,428 declines and 455 advances. About 25 stocks hit a new 52-week high, and 146 stocks traded in the lower circuit. BSE, Waree Energies, Axis Bank, and Reliance were the top trading counters, in terms of value.
The Nifty has formed a Shooting Star candle on a weekly time frame and closed on the 50-week average support. Though the volumes were lower than the previous day, the index has given a clear weaker signal. It filled the Monday gap area, closed below Wednesday’s low, and confirmed the inside bars’ downside implications. The index took support at the 8EMA and bounced in the afternoon session. The broader market selling pressure was visible as all sectoral indices were negative. Only the IT index is able to close positively. The negative divergence in RSI is clearly formed now. In any case, closing below 60 will result in further weakness in the market. A close below 23,888-742 will be negative, and it can test the next support of 23,360. Below this, the Nifty may test 23,051, which has higher probability. On the upside, a close above 24,365 is needed to resume the uptrend. As the market is nervous at higher levels, and with a clear bearish signal, it is better to avoid taking fresh long positions.
(The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)
