Nifty forms most bearish candle

The equity benchmark indices declined sharply last week and turned bearish. NSE Nifty declined by 518.10 points or 2.57 per cent last week. BSE Sensex also declined by 2.70 per cent. The Nifty Mid-cap and Small-cap indices are down by 1.69 per cent and 2.48 per cent. On the sectoral front, only the PSU Bank index gained by 3.35 per cent. The Nifty Realty was the top loser with 4.34 per cent.

The FinNifty and the Metal index are down 3.89 per cent each. All other indices declined and closed with over a percentage point loss. The FIIs were net sellers during all sessions in the last week. They sold Rs18,261.39 crore in the current month. The DIIs bought Rs12.169.37 crore worth of equities. The market breadth is mostly bearish.

As cautioned earlier, the markets declined sharply last week. It closed just below the 20DMA, which means the process of means reversion is done. It signaled the short-term negative by closing below the previous week’s low. It retraced more than 50 per cent of the prior upswing. The declines were as sharp as possible, with higher volume. The trading range also increased to 537 points in the last week. On a weekly basis, the Nifty has formed the most bearish candle after June 2022 (points and percentage-wise). This is also a sharp decline after Feb 2023 (percentage-wise). All the sessions during the week closed with negative bias. It closed at the low of the week.

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