The equities traded volatile during the week. Large-cap stocks were the underperformers. The benchmark index, the Nifty, declined by 133.35 points or 0.58 per cent. The BSE Sensex is down by 0.83 per cent. The Nifty Midcap-100 and Smallap-100 advanced by 1.68 per cent and 1.49 per cent, respectively. The Microcap-250 is up by 0.11 per cent. On the sectoral front, the Metal and Energy indices gained by 5.16 per cent and 3.34 per cent, respectively. All other indices were declined. The Auto index is down by 2.05 per cent, and FMCG has declined by 1.96 per cent. The market breadth is mixed during the week. The India VIX is down by 3.23 per cent to 14.53. The FIIs sold Rs.36,976.70 crore, and the DIIs bought Rs.42,601.02 crore worth of equities this month.

After seven days of oscillation, the Nifty finally closed below 22800 with higher volume. It tested the low several times before closing below. It formed a long upper shadow, a small body candle on a weekly chart. The weekly volumes were lower. The 23000-23050 zone is acting as a strong supply zone. It failed to close above this resistance zone. The index registered the lowest closing after 6th June. The rally attempts efforts were failed. The index has formed a series of lower highs and lower lows. Unless it forms a higher high above 23807, the index is in a confirmed downtrend.

The Nifty is trading below all short and long-term averages. It is 5.28 per cent below the 200DMA and 2.74 per cent below the 50DMA. The 200EMA is placed at 23560. For a bullish bias, the index must close above 23560, at least. For a short, the 20DMA of 23216 is the crucial resistance level. There are several resistances on the upside till 23800-24060 zone. But, on the downside, the reasonably strong support is at 23350, which is another over two per cent away. Now, the Nifty took support at the April 2023 high of 22783. In any case, the index closes below the 22557-350 zone of support, and the next target zone is 21679-281. As the index entered into the Category-2 correction, expect the next leg of fall will be a sharper one. The will complete the 17-19 per cent correction from the top. It is important for the price to form a base around this support zone of 22679-281. Expect counter-trend consolidations, which may indicate the future direction. In any case, the index fails to consolidate and reverse from here, except for the Category-2 correction target of 25 per cent from the top, which is at the 20200-19800 zone. The current bear market may end by May this year. Historically, the majority of the bear market ended in eight months. We are in the fifth month of correction.

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