Consolidation may continue this week

Equities traded nervously last week. NSE Nifty traded in a 539.70-point range, or 2.14 per cent, and finally ended with a minor loss of just 50.35 points, or a 0.2 per cent. BSE Sensex is also down by 0.38 per cent. The broader market indices- Midcap-100 and Smallcap-100- recovered by 1.26 per cent and 1.33 per cent, respectively. The Nifty Pharma and Auto indices were the top gainers with 2.11 per cent and 1.97 per cent. The Nifty Metal and PSU Bank indices are down by 1.78 per cent and 1.62 per cent. The India VIX declined by 6.42 per cent to 13.22. The FIIs were aggressively selling the equities. In just seven trading sessions, they sold Rs58,394.56 crore worth of equities this month. The DIIs bought Rs57,792.20 crore.

The Benchmark index, Nifty, consolidated after a 4.45 per cent fall in the previous week. The bears’ domination continued at the beginning of the week. It declined by almost a percentage point on Monday, and it mostly traded in this range in the next four days. The volumes were consistently declined. The Nifty tried to close above the 50DMA throughout the week, but failed. As we expected earlier, the consolidation may continue for the next one or two weeks before taking directional bias. The 20DMA enters the downtrend, which is the major directional change after several weeks. The 10-week average is also flattened, which means the end of the strong uptrend.The expanded Bollinger bands indicate further consolidation until the bands’ contract.