Technical charts indicating weakness

The domestic benchmark indices opened with a positive gap with the positive global futures. The indices failed to sustain the opening highs. The Nifty lost 28.95 points and closed at 17063.25. The Realty index is the top gainer as it is up by 3.15 per cent. The PSU Bank and Smallcap-100 indices are up by over one per cent. The Auto, Infra, FinNifty closed with 0.20 per cent losses. All other indices closed with tiny gains. The VIX is cooled off by 7.95 per cent. The broader market breadth is positive as 1406 advances and 656 declines. About 40 stocks hit a new 52-week low, and 159 stocks traded in the upper circuit. Kotak Bank, Infosys, ICICIBank were the top trading counters.

The equity market opened with an optimistic note and closed with a pessimistic and indecisive mindset. The rollover data shows that traders are not interested in carrying forward the positions with the monthly derivative expiry in place. The rollovers are much lower than the three and six month's average. Despite the open interest having increased, the volume is lower than the previous day. Overall, the market is in a tricky situation.

Technically, the benchmark index trades between the short-medium-term averages 20 and 50DMAs and the long-term moving average of 200DMA. Currently, the 20DMA is placed at 17318, and the 50DMA is at 17430. Unless the Nifty moves above these levels, we can't expect the market to resume the uptrend. The long-term average 200DMA is at 16887. There are multiple supports at the 16800-830 zone. Any close below these supports will have long-term bearish implications. With over 130 points decline from the opening highs, the momentum buildup on the downside. The MACD histogram shows an increase, a weaker signal.

The market breadth is positive in the broader market. But, the index breadth is negative. This is simply because of large-caps underperformance. More number of stocks are hitting new 52-week low is another indication of weakness in the market. Given LIC's mega IPO and the new margin rules implementation from next month, it is expected to witness selling pressure from retail traders.

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