See-saw momentum till the Budget

The broader market resumed its downward movement on a very high volatile day. The banking stocks, PSU banks rally saved the market from another big fall. After testing below 16900 levels, the Nifty sharply recovered closed at 17110.15 with a 167.80 points decline or 0.97 per cent. The PSU Bank index is up by 5.07 per cent. With this, the Bank Nifty recovered almost 1000 points from the day's low, finally closing with a gain of 0.73 per cent. The Media and Auto indices are also up by 0.59 per cent and 0.34 per cent, respectively. The IT index is the top loser with 3.5 per cent. Pharma and Realty indices are down by 1.87 per cent and 1.81 per cent. The market breadth is negative as 1231 declines and 829 advances. About 45 stocks made a new 52-week high and 188 stocks traded in the lower circuit. There were 41 bulk deals recorded today. Axis Bank, Maruti and Reliance counters recorded the highest turnover.

The Nifty traded in 316 points range with high volatility on a monthly expiry. It settled with a net loss of 0.84 per cent, with a deep negative market breadth. With the high budget expectations, the PSU Banks were in the limelight. They saved the market from a big fall as the PSU bank index up by 5.2 per cent. The Nifty has recovered 180 points from the day's low.

On expected lines, the volatility has increased. The benchmark index has formed an inside bar. As it formed a higher low bar, Tuesday, the panic bottom has become crucial support. It may hold for the next two sessions at least or before triggers from the budget. The January monthly series ended with a decline of just 91.70 points. Though it recovered 243 points from the day's low, the indicators are showing any positive strength. In fact, the histogram shows an increased bearish momentum.

The daily RSI once again closed below the 40 zone. The Nifty faced resistance at 23.6 per cent retracement level (17190) of prior fall. It closed above this on the previous trading session. As the new and budget week series has begun, the money implied volatility is very high at 27.1. With this high IV, the premium has become expensive.

Technically, Tuesday high and low (17390-16836) will act as resistance support for now. We may see a see-saw momentum till the budget. Expect the PSU banks to trade positive till the budget.

(The author is financial journalist, technical analyst, family fund manager)