Nifty holds bearish strength with increasing gap between 50&200DMA
Even on the lower time frame, the histogram is still below the zero line, and the index is below the moving average ribbon
The domestic equity market recovered from the day's low and closed flat. After a huge gap opening, the BFSI sectors lead the recovery. The Nifty closed at 17069.10 with 33.45 points or a 0.20 per cent loss.
The Bank Nifty and Fin Nifty are up by 0.21 per cent each. The Metal index is the top gainer with 0.57 per cent. Nifty IT and Auto indices are down by 1.53 per cent and 1.26 per cent, respectively. The broader indices Nifty Smallcap100 and Midcap-100 are down by 1.34 per cent and 0.59 per cent.
The India VIX is up by 4.47 per cent and ended at 20.28. The broader market breadth is negative as 1407 declines and 678 advances. About 43 stocks hit a new 52-week high, and 134 stocks traded in the lower circuit. Today, Tata Chemicals, HDFC Bank, and Reliance are the top trading counters.
As expected yesterday, the Nifty opened with a big gap down, but it recovered smartly and closed near the day high. The fall was limited for the first hour. On Friday, the global tumble, the sentiments weak at the beginning of the session.
As some of the heavyweight like HDFC twins, the index recovered and filled the opening gap. BFSI and Metal sector stocks mainly contributed to the recovery. But, the index and broader market breadth is negative.
The Nifty faced resistance at 50DMA. Interestingly, the gap between 50 DMA and 200DMA increasing shows the bearish strength. It declined below three days low and broke the important support. On a closing basis, it closed within the pennant pattern. Even though it is still in the broader trading range, it closed near to the previous day's low.
Even on the lower time frame, the histogram is still below the zero line, and the index is below the moving average ribbon. For now, the Nifty is in a neutral zone; better avoid the aggressive positions as Tuesday is a holiday for the markets.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
