Nifty to witness sharp fall for the next week

Hyderabad The domestic equity market nosedived again after a brief pause in the trend. The benchmark indices resumed their declining phase. The Nifty went down by 263.2 points of 1.53 per cent and settled at 16985.20. The Nifty IT index is the only sector index is able to close with a gain of 1.35 per cent. The Nifty Media index declined by 4.74 per cent becomes the worst performer.

The Nifty Realty and PSU Bank indices are down by 3.93 per cent and 3.64 per cent, respectively. Bank nifty, Fin nifty down by over 2.5 per cent. The other sector indices were down by over two per cent. The India VIX up by 2.78 per cent. The market breadth is extremely negative as 1605 declines and 435 advances. About 88 stocks hit 52 weeks high, and 136 stocks traded in the lower circuit.

As we forecasted yesterday, the Nifty has broken down the counter-trend consolidation pattern, bearish Flag with a higher volume. We assume that the market is in a confirmed downtrend with consecutive distribution days. On a weekly chart, the index has formed a bearish engulfing candle. The candle is most bearish, as the open is the highest level, and the close is at the lowest level. The current week's candle is also called a bearish belt hold. It is also an outside bar.

Even on the daily chart also, it formed a most bearish candle. The Nifty declined below the 100 exponential moving averages. The index also closed below the 50 per cent retracement level of the prior trend for the third time. As stated earlier, the declines are sharper than the advancing move and consume less time. Just five stocks of Nifty 50 closed with gains. And the overall market breadth is very negative. The histogram just hanging on the zero line and shows the momentum is on the downside.

MACD line is much below the zero line. Even the broader market index Nifty-500 also has broken down the bearish flag pattern, indicating that the whole market enters into a bear's grip, irrespective of market cap. Most sectoral indices declined by more than two per cent, which is another indication of the bearish trend. As per the time cycle, the Nifty will undergo another round of sharp fall even for the next week. Now, it is the time to avoid any kind of long positions, and take out the profits from the table as soon as possible.

(The author is Chief Mentor at Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer, and Family Fund Manager)