Nifty slips below 20-DMA; Trident hits new 52-week high, IDBI zooms 5 per cent
An interesting observation is that Nifty has slipped below its 20-DMA for the first time since July last week.
Market Update at 12:30 PM: Nifty and Sensex plunged over 0.75 per cent each with Nifty slipping below its important mark of 17,500, while Sensex is below the 58,700 mark. An interesting observation is that Nifty has slipped below its 20-DMA for the first time since July last week.
Among the sectoral indices, Nifty Media, Nifty PSU Bank, Nifty Metal & Nifty Pharma were trading in the green while on the other hand, Nifty Realty and Nifty Financial Services turned out to be the top losers as they lost more than 1 per cent each.
Among stock-specific action, Trident hits a fresh 52-week high and got locked at a 5 per cent upper circuit. Besides, IDBI Bank also jumped 5 per cent and is seen trading near its day’s high.
Nifty has formed as many as four red candles in the last five trading sessions. After hitting a fresh lifetime high of 17,947.65, Nifty is forming lower highs. It declined 204.80 points or 1.15 per cent since last Thursday’s close. On a weekly chart, it is forming a dark cloud cover-like candlestick pattern.
In September, Nifty 50 has gained 485.95 points or 2.84 per cent. After taking support at the channel demand line for two days, Nifty has finally broken down the channel. The next immediate support is at 20-DMA of 17,530. The distance from the 20-DMA has declined to just 0.55 per cent. This support-breaking move is not a trend reversal sign. Unless the index forms a lower low and a lower high, we cannot assume a trend reversal.
The recent swing low is at 17,326. Below this level, the index will form a lower low. As long as Nifty trades above this level, the consolidation will continue just as we expected. If there’s a break below 17,326, Nifty may go on to touch the level of 17,254 on the downside. Having said that, we expect it to take support around this region and bounce back.
As India VIX is already trading above the 18 level, any kind of spike will result in serious price swings in a shorter period. The RSI developed negative divergence, and it got confirmation of the bearish implications as it closed below the prior swing. The MACD line is below the signal line for the third consecutive day, and the histogram shows an increase in the bearish momentum. For the weekend, the level of 17,326 is a critical support zone and a close below this level will result in the formation of a lower low.