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Hans India
4 days ago
- Business
- Hans India
No weak signals but waning momentum
The equity indices consolidated for a second successive week. The Nifty declined by 102.45 points or 0.41 per cent. The BSE Sensex is down by just 0.33 per cent. The broader indices outperformed as Midcap-100 and Smallcap-100 gained by 1.29 per cent and 1.36 per cent, respectively. On a sectoral front, the Nifty Media is the top gainer with 1.67 per cent, followed by Realty with 1.33 per cent. The Energy and Banknifty are up by 0.68 per cent and 0.63 per cent. On the other hand, the FMCG sector is down by 2.16 per cent. The Auto and Consumer Durables fell by 0.81 per cent and 0.77 per cent, respectively. The India VIX is down by 6.95 per cent to 16.07. The FIIs bought Rs.11,773.25 crore, and the DIIs bought Rs.67,642.34 crore worth of equities during the month. As we forecast earlier, the benchmark index Nifty continues to consolidate within the range. With the last two weeks of inside action, the momentum is waning. As the index has not formed a lower low and is trading above the key supports, there are no weaker signals available. It traded in the 24378-25116 range over the last 15 days and closed at the midpoint of the range. It took support at 20 DMA twice during this consolidation. As long as this inside price action is taken out, the directional bias is neutral. As the MSCI rebalancing happened, massive volumes were recorded on Friday. The volumes were highest after 4th June 2024. Interestingly, the Nifty holds 9 nine distribution days currently, which is the highest number in recent history. Normally, when the distribution day count increases above six, there will be a confirmed downtrend. But the Nifty is in a confirmed uptrend this time. The interesting technical factor is a rare phenomenon. From the 4th March low, the volume trend is increasing. The Nifty is now 3.30 per cent above the 50 DMA, and just 0.23 per cent above the 20DMA. Even after a 15.51 per cent rally, the 200 DMA is still flat, not in an uptrend. The 200 EMA and other medium-term averages are in a decisively uptrend. This shows the inherent trend is stronger. The recovery from the 7th of April is very impulsive. All impulsive rallies normally consolidate before continuing the prior trend. A normal consolidation pattern takes 3-8 weeks time. As we stated, the time correction is due now. The 23.6 per cent retracement level of the recent upswing is at 24320. The 12th Mary low is at 24378. This zone is the crucial support of the consolidation. A close below the 20 DMA of 24692 will indicate a short-term weakness. In any case, the index closes below the support zone, the 50 DMA is at 23960, and the 38.6 per cent retracement level is at 23827. We can not expect the market to go down below this zone for now. If the Nifty declines below this, it means closing below the 200 DMA. For the past two weeks, the focus has shifted to mid- and small-cap stocks, as large caps are consolidating. The Midcap-100 index gained by 6.09 per cent, and the Smallcap-100 is up by 8.72 per cent. Whereas the benchmark Nifty has advanced just 1.71 per cent. In the current calendar year, the Nifty is positive by 4.7 per cent. Several stocks are breaking out of early-stage bases and showing higher relative strength. These stocks show a decent improvement in fundamentals with earnings growth. These stocks have the potential to outperform.
Hans India
26-05-2025
- Business
- Hans India
Expect choppy sessions as monthly expiry nears
During the previous week, the equity indices consolidate in the range. The benchmark indices declined just 166.65 points or 0.67 per cent. The BSE Sensex is down by 0.74 per cent. The Midcap-100 was down by 0.65 per cent, and the Smallcap-100 gained by 0.47 per cent. On the sectoral front, the Nifty Realty index is the top gainer with 2.66 per cent, followed by Metal with 0.52 per cent. On the flipside, the Consumer Durables index is down by 2.16 per cent. and Auto is declined by 1.83 per cent. The IT declined by 1.50 per cent. The India VIX is up by 4.40 per cent to 17.28. The market breadth is mostly positive. The FIIs bought Rs.12,191.61 crore this month. The DIIs bought Rs.34,497.56 crore worth of equities. The benchmark index took a breather after a thousand-point rally in the previous week. It consolidated within the previous week's range and formed an inside bar. The Nifty took support at the 20 DMA and bounced. The trend strength is still stronger, as the index did not violate the prior week's low and key support levels. The counter-trend consolidations are common after an impulse move. After last Thursday's massive 395-point gain, the volumes are declining. Interestingly, the down days attracted more volume than the up days. It registered two distribution days. Currently, the Nifty holds six distribution days, which is on the higher side. With this number of distribution days, if the index trades below key supports or the 50 DMA, it would confirm a downtrend. But it is trading above all key short and long-term averages. The 20 and 50 DMAs are in the uptrend, which shows the trend is not in danger. If it declines below the previous week's low of 24462, it will give weaker signals. As the monthly expiry is approaching, expect a spike in volatility. For a strong bullish bias to emerge, the Nifty must move above 25116 and close decisively. Above this the 25307 is the nearest target. The Nifty may not breach the 24300-378 zone support but may trade with high volatility. In any case, the Nifty closes below this zone, the 50-week average will act as strong support. The RSI is in the neutral zone in all time frames. The Weekly MACD line is above the zero line. The market may enter into a time correction, as long as there is no leg of trending moves. The 25100-310 will be a Herculean task to be violated. As long as the Nifty trades between the 24300-25100 range, stay with a neutral bias. The sector and stock rotation will be in focus. Focus on the stronger relative strength and momentum stocks. All the profitable trades must be protected with strict stop losses and keep leveraged positions should be kept at modest levels. Stay cautiously optimistic next week. (The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)
Hans India
12-05-2025
- Business
- Hans India
Avoid highly leveraged short positions
NSE Nifty opened the week with a strong note, but declined below the key levels as geopolitical tensions escalated. The Nifty declined by 1.39 per cent, and BSE Sensex is down by 1.30 per cent. The broader indices, Midcap-100 and Smallcap-100 indices, declined by 0.90 per cent and 2.17 per cent, respectively. The Auto is the top gainer with 1.53 per cent on the sectoral front. The Media and Consumer Durable indices gained by 1.30 per cent and 0.32 per cent. On the flipside, the Realty is down by 6.56 per cent, and Bank Nifty slipped by 4.46 per cent. The Pharma and FinNifty are down by 2.57 per cent and 2.48 per cent, respectively. The market breadth is mostly negative. The India VIX is up by 18.49 per cent to 21.63. The FIIs bought Rs7,857.23 crore in this month. The DIIs also bought Rs13,741.45 crore worth of equities. The markets are to open with a gap up on Monday as the ceasefire was announced, negating the probability of full-fledged war. The markets may feel joy as the war risks were averted. Technically, the market is at a very crucial support area. The benchmark index, Nifty, has already breached its 200DMA support. It is almost at the 21st April gap area, and 20DMA. The 23,908-23,872 area of support is crucial now. As long as the Nifty defend this zone, it will continue to consolidate within the range of 23,900-24,600. The index has tested the 61.8 per cent retracement level (24,545) twice in the last two weeks, which is an upper limit of the consolidation for the next few days. On a weekly chart, the Nifty has formed a bearish engulfing candle. At a swing high, this candlestick pattern is a sign of bearish bias. But, it needs a confirmation for its implications, by closing below it, next week. Currently, the index is holding three distribution days. In any case, the index breaches the crucial support area by adding two more distribution days will be negative. However, if the closes above the 24,275 will be positive and try to test the recent high. The RSI is in the neutral zone on weekly and daily time frames. The MACD has given a fresh bearish signal on the daily chart. The -DMI just crossed the +DMI is a bearish sign. The ADX line is also declining, showing weakening trend strength. The Geopolitical tensions turned into an unexpected ceasefire and are open for deliberations in a neutral venue. At the same time, some violations are a cause of concern. In this background, the market may feel a breather as the economic risks were avoided. Expect a positive opening on Monday. The weekly closing is crucial for the medium-term directional bias. Watch the 23,900 and 24,240 zone for a short-term directional bias. As long as the support is protected, stay cautiously optimistic. Above 24,240 points, the Nifty may test 25,600. A decisive close above 24,545 with higher volume will be positive, and the targets are open towards 25,000-25,300. As the geopolitical events are taking new twists every hour, adopt a defensive approach. When emotions are playing a major role, sometimes technicals do not work. Focus on low beta stocks and high relative strength stocks. Avoid highly leveraged short positions. (The author is partner, Wealocity Analytics, Sebi-registered research analyst, chief mentor, Indus School of Technical Analysis, financial journalist, technical analyst and trainer)
