Nifty yet to form bearish bias as of now

On a roller coaster ride

• Banknifty, FinNifty were top losers
• VIX is up by 1.55%
• Mkt breadth positive as 1318 advances and 1157 declines
• 191 stocks hit a new 52-wk high, 154 stocks traded in upper circuit
• MACD histogram is flat

The tightening of credit norms by the Reserve Bank of India (RBI) spoiled the mood of the market. The Nifty tried hard to close positively but was unsuccessful. It declined by 33.40 points or 0.17 per cent and closed at 19731.80. Banknifty declined by 1.31 per cent, followed by FinNifty which was down by 0.90 per cent. Both were the top losers on Friday.

PSU Bank, and private sector bank indices were also down by 2.39 per cent and 1.30 per cent respectively. The energy and IT indices declined by 0.25 per cent and 0.48 per cent, respectively. All other sector indices advanced by less than a per cent. The India VIX is up by 1.55 per cent. The market breadth is positive as 1318 stocks advanced and 1157 declined. About 191 stocks hit a new 52-week high, and 154 stocks traded in the upper circuit. SBI, HDFC Bank, and Bajaj Finance were the top trading counters on Friday.

After a recovery of 138 points from the opening low, Nifty was unsuccessful in holding the gains. It made lower high and traded within the first hour’s range for the day. It also failed to close above the prior swing high. It formed an open-low candle.

As mentioned on Thursday, the 19875 is the key resistance for now. Nifty did not make a lower low for reversal confirmation. As it formed an inside bar, 19627 will be a key support. A close below this will be negative and test the 20DMA. For an upside rally to resume, the index must close above 19,875. Though the decline is very small, the price structure is giving some suspicious evidence.

The banks and financials were hit a lot on Friday due to RBI intervention on personal credit. The 50DMA support is at 19587, which is another support for the short term. The RSI declined below 60, showing the momentum loss in the ongoing pullback rally. The MACD histogram is also flat. The Nifty is now 0.73 per cent above the 50DMA and 2.07 per cent above the 20DMA. The index is yet to form a bearish bias and needs to break the 19695 for a bearish view. Stay on the sidelines as long as it trades above 19695 and below 19875. We may not get good trades in this zone. Stay calm.

[Chief Mentor, Indus School of Technical Analysis; Financial Journalist, Technical Analyst, Trainer and Family Fund Manager]