Weekly MACD About To Give A Bearish Signal

A weekly close below 24,800-850 zone will confirm the implications of last week’s bearish engulfing candle. The immediate support is at a 10-week average of 24735 and 50DMA of 24645. As the weekly derivative expiry is scheduled, expect more volatile moves

The equities collapsed in the afternoon session, led by heavyweight stocks. Tata Motors, Reliance, L&T, and SBI were the major draggers. NSE Nifty declined by 122.45 points or 0.49 per cent and closed at 24,918.45 points. Only the FMCG index is able to close with a 0.28 per cent gain. The Oil and Gas index was the top loser with 1.92 per cent, followed by PSU Bank index with 1.75 per cent. The Energy, Commodities, CPSE, Auto and Realty indices declined by 1.16 per cent to 1.64 per cent. All other indices declined by 0.15 per cent to 0.96 per cent. The India VIX is up by two per cent to 13.63. The market breadth is negative as 1,728 declines and 1,019 advances. About 147 stocks hit a new 52-week high , and 115 stocks traded in the upper circuit. Tata Motors, Zomato, PrismJohnSN, HDFC Bank, and SBI were the top trading counters today, in terms of value.

The Nifty sharply declined in the afternoon session with higher volume. As suspected earlier, the low volume recovery for the last two days was not sustained long. It failed to move the previous day’s high, forming a lower high and lower low candle. The index opened flat to negative bias, but recovered and traded in positive territory for some time. The broader market selling pressure intensified, and all sectoral indices were red. The Nifty registered a fresh distribution day as the volume was higher than the previous day and the decline was over 0.49 per cent. The 20DMA acted as support for the three days but failed on the fourth day as the index closed below to it. Though the index declined below this crucial support, as the last 15 minutes of short-covering, it was able to close above it. The daily RSI declined to 53.78. The MACD histogram shows a further increase in the bearish momentum. The Weekly MACD is about to give a bearish signal. As stated earlier, the market is in consolidation mode. A weekly close below the 24,800-850 zone will confirm the implications of last week’s bearish engulfing candle. The immediate support is at a 10-week average of 24,735 and 50DMA of 24,645 points. As the weekly derivatives expiry is scheduled, expect more volatile moves. Avoid fresh long positionsand wait for shorting opportunities.

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