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Base range consolidation likely for next 1-2 days
Nifty fails to form a base for an upside breakout; As the May series expiry is in just two days, the rollovers and volatility will impact
The equities closed lower after a muted opening. The broad-based selling pressure continued for the second day. The benchmark index, Nifty was down by 89.55 points or 0.55 per cent. The Nifty futures are trading at a discount. The Bank Nifty, Fin Nifty and the Auto indices closed in flat to positive territory. The IT, FMCG, Pharma, and Metals Realty indices declined by over one per cent. The Media index was the worst performer with 2.57 per cent. The India VIX is up by 9.56 per cent. The broader indices Smallcap-100 are down by 1.26 per cent, and the Midcap-100 index is lower by 0.65 per cent. The market breadth is negative as 1528 declines and 549 advances. About 75 stocks hit a new 52 week low, and 134 stocks traded in the lower circuit. Divis Lab, Reliance and Adani Power were the top trading counter by value today.
The Market opened on a flat note and traded sideways for a while. Once again, the afternoon session witnessed selling pressure in all sectors. The closed below the prior day's low is a sign of losing strength in the basing formation for an upside breakout. As discussed earlier, it failed to close above the 16400 level and declined. Monday's Shooting Star candle got a confirmation for its bearish implications by closing below the shooting star low. On a 75 minutes chart, the Nifty has broken down the descending triangle, which is bearish in nature. The target is open to below 15900 levels. Though the intraday range was smaller than the last week, resembling some of the previous week's candles, the gaps are missing this week. The consolidation within the base range may continue for another one or two days and can test the support again. As the May series expiry is in just two days, the rollovers and volatility will show the impact.
The VIX touched the 26 zone, which is not good for the Market. Whenever VIX rises above the 24-26 zone, the markets generally will have an inverse relationship effect. The indices may decline sharply. Currently, the market has been consolidating for the last eight days, and either side breakout will give the sharpest possible move. As the index reacts from the resistance line, and with the bearish confirmations, we may see a lower weekly closing this week. Do not trade on the long side, unless the Nifty closes above the 20DMA.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
