Will bulls get back on street?

The positive opening on Nifty turned out to be a formality as soon after opening, it succumbed to selling pressure and breached the 14,800 mark to hit a low of 14,745 level. However, in the second half of the trading session, Nifty witnessed a sharp recovery from the lower levels, and it managed to erase more than half of the losses in the last couple of hours of trade and settled above the 14,900 mark, down by 101 points.   

A recovery of almost 180 points from the lower levels resulted in the formation of a long lower shadow as the price action of the day resembles a hammer pattern. During the day, Nifty took support around the 50-DMA and it witnessed a decent pullback from the lower levels. Along with this pullback in price from lower levels, India VIX index too cooled off, which bodes well for the continuation of the pullback rally in the index. During the earlier part of the day, India VIX moved past its prior session high; however, it settled at 21.22, down by 2 per cent.  

Going ahead, all eyes would be on the 50-DMA, which is placed around the 14,700 mark. As long as the index stays above this level, we might continue to witness stock-specific action while the index may continue to consolidate in a broad range. A decisive breach of this level would invite incremental weakness, where the next support is seen around the swing low of 14,467.   

On the upside, the level of 15,003, where the 20-DMA is placed, is likely to act as an immediate resistance, followed by the level of 15,100. The bulls are likely to regroup only after clearing the said resistance zone and if it closes above the 15,100 mark, it will test the level of 15,300 in the near term.   

The -DMI is above the +DMI while the -DMI is in a rising trajectory, which is an indication that the bear has an upper hand. Further, the MACD history increases its bearish momentum.   

Overall, the index continues to move in a broad range with volatile moves. Hence, it is better to adopt a stock-specific approach in the markets and as far as the index is trading, it would be better off to adopt a wait & watch approach unless and until we see a decisive trend emerging.