Nifty breaches its 50-DMA; India VIX jumps 10 per cent!
Market Update at 10:20 AM:Indian markets traded near the low of the day on Wednesday while Nifty breached its 50-DMA for the first time after almost two months. HDFC twins and Reliance have combinedly contributed 55 points to Nifty’s losses. Among the sectoral indices, all the indices were trading in red with Nifty PSU Bank and Nifty Financial Services being the top losers.
India VIX jumped nearly 10 per cent while the market breadth seems to be in favour of the bears.
SGX Nifty is signalling that after a sell-off, which was witnessed in the last trading session, the bulls are likely to bounce back as SGX Nifty is up by 39.50 points and was seen trading at 15,781.50 levels.
Nifty started off Tuesday’s session on a positive note and went on to touch a high of 15,881.55. However, it failed to sustain at higher levels, and a sharp sell-off was seen in the markets in the afternoon session amid selling among the Asian peers, especially in Hong Kong & China’s market. Nifty has lost almost 180 points from the day’s high, but recovery in the fag-end of the day kept the losses restricted as Nifty settled the day with a net loss of 78 points. Interestingly, the pharmaceutical sector, which is known as a defensive sector, plunged sharply as it recorded a loss of over 4 per cent on Tuesday with the stock of Dr Reddy’s tanking over 10 per cent.
The price action of the day has formed a bearish candle on the daily chart as the closing was lower than the opening, indicating continued profit booking. The index has also breached its 20-DMA on Tuesday.
Nifty has been under a prolonged consolidation phase for over a month now. Hence, the tussle is still on over the next directional move in the index. Unless and until, the level of 15,450-15,550 on the downside and the level of 15,950-16,000 on the upside are not cleared on a closing basis, the index is likely to oscillate in this range. However, bouts of volatility are likely to be witnessed within this range, which will only make trading difficult for directional trend traders. Hence, index directional traders have no other option but to confine themselves to the fence.
Overall, the trend remains sideways while on the upside, the immediate resistance is seen at the downside gap of July 19 and on the downside, 50-DMA is likely to act as a support. Hence, watch out for these levels today!