The market suffered one of its worst drawdowns in the recent months as it opened low, grew weaker as the day progressed and ended the day with a deep cut. The Russia-Ukraine conflict escalated with overnight airstrikes Russia on Ukraine. The US market had already closed weak following this development.
While inheriting this situation in the morning, the Indian equity market opened significantly lower, and got weaker during the day. Nifty struggled at one point in time as it defended the 16,500 levels for some time. Once having violated this level, the index went on to test the 16,200 levels. While showing no signs of any recovery, the headline index ended with a net loss of 815.30 points (-4.78 per cent).
The markets have violated the 200-DMA which presently stands at 16,894. Nifty has dragged its resistance points lower after violating this level. Whenever the market will see a technical pullback, this level will act as a resistance on a closing basis.
There was also monthly expiry that happened during the day. This remained quite painful as Nifty was unable to hold on to any level with heavy Put unwinding happening at all key levels. The next month has seen significant put writing happening at 16,000 and 16,200 levels.
This indicates that while Nifty scrambles to find a foot for itself, this zone may act as support unless there is a fresh heavy set of negative cues to deal with.
India VIX witnessed a heavy spike. It surged 30.31 per cent to a 20-month high level of 31.9825. Nifty may see a shaky start to the trade; the levels of 16,350 and 16,400 are expected to act as resistance levels.
Supports come in at 16,100 and 16,030 levels. The daily RSI is 30.20. It is on the brink of getting oversold.
ET CONTRIBUTORS
The RSI has set a new 14-period high which is bearish. It stays neutral and does not show any divergence against the price. The daily MACD is bearish and trades below the signal line.
A falling window emerged on the candles. This usually resolves in the direction of the trend. However, just like any other formation on the candles, this will require confirmation on the next trading day.
The pattern analysis shows that while Nifty has violated a couple of extended trend line supports, it has also violated the all-important 200-DMA on a closing basis.
On its way up, this point is likely to pose serious resistance on a closing basis. The current breach has resulted in a breakdown of the indices from a bearish descending triangle pattern.
All in all, the most prudent way to navigate such markets is to stay away from it. Not only leveraged positions should be avoided, even new purchases should be kept limited to an extent.
Creating fresh shorts at current levels will not offer a safe risk-reward proposition at present. It is recommended that all declines should be used for making purchases in good quality stocks. Investors may not expose all their investible capital at once, but accumulation can be down with each incremental downsides that the markets have to offer. A continued cautious approach is advised for the day.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and is based at Vadodara. He can be reached at [email protected])
Stay connected with us on social media platform for instant update click here to join our Twitter, & Facebook
Denial of responsibility! NewsAzi is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
ET CONTRIBUTORS