Nifty likely to take bearish path
It made a negative close and formed Shooting Star kind on Thursday and also on weekly chart
The domestic equities opened with a huge gap down due to the Fed rate hike, but most of the losses at the end of the day. The NSE Nifty has lost 30.15 points or 0.17 per cent and settled at 18052.70. The PSU banks rallied further and saved the Bank Nifty from a negative close. The PSU Bank index, gained by 2.52 per cent, is the top gainer on Thursday.
The Realty, Bank Nifty, and FMCG indices are up by 0.2 to 0.58 per cent. The Nifty IT was the top loser with 1.18 per cent. The Nifty Auto, Metal, Energy and Infra indices are down by 0.11 to 0.58 per cent. The market breadth is negative as 1,010 declines and 874 advances. About 59 stocks hit a new 52-week high, and 69 stocks traded in the upper circuit. Mazdock ship, SBI, and M&M financial services stocks were the top trading counters on Thursday in terms of value.
On Thursday, a negative close and a shooting star kind of a candle confirmed the bearish implications of the last two days of price action. As the Nifty closed just below the previous day's low, the bearish engulfing got the confirmation. It opened below the 5EMA and recovered sharply in the first two hours. But it failed to form the higher highs on an hourly chart.
The opening bar took support at moving the average ribbon. The Nifty formed a Shooting Star kind of candle with a long shadow on a daily chart, and another Shooting Star candle is forming on a weekly chart as well. As mentioned earlier, a close below 17,990-18,000 will be a short-term negative for the market. With Thursday's decline, the 18,179 has become a swing high for all practical purposes.
As long as this level is not broken, the counter-trend will continue. The question is, will the Nifty breach the 17,890-841 zone of support? The daily RSI has developed a negative divergence. The Nifty recovered for the first two hours and the last two hours. There was a decline in between. The Volatility has increased with buying and selling bouts.
As the RBI monetary policy announcement is scheduled on Friday morning, the market may trade sideways for one hour. Wait for a policy announcement and the market reaction to it. Unless an hourly close is above 18,110, we may see some more profit booking. But, a decline below 18,000 will be a negative for the market, and it can test 17,890 in a sharper manner. Be patient to trade with prudent risk management.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
