NSE Nifty began the last week with a bearish note and formed a lower low. The Nifty declined by 228.30 points or 0.97 per cent. BSE Sensex also declined by 0.98 per cent. The Midcap-100 and Smallcao-100 indices gained by 0.04 per cent and 0.15 per cent, respectively. The Nifty Metal is the top gainer with three per cent. All other indices closed negative. The Nifty IT is the top loser with 5.8 per cent. The FMCG is down by 2.4 per cent, and Realty declined by 2.5 per cent, were the top losers. The Market breadth is mostly negative. The India VIX is up by 5.58 per cent to 15.75. The FIIs sold Rs46,576.06 crore, and the DIIs bought Rs49,367.14 crore during this month.

The Nifty has formed a perfect Doji candle on a weekly chart. After last week’s 573 points decline, it was indecisive, continuing the fall, though it was down by a per cent. On Monday, the Index sharply declined by 1.47 per cent and formed a lower low. Mostly, it traded within the Monday’s range. It filled the gap on Thursday. Even though Monday’s low is protected, the Index has formed indecisive and bearish bars during the week. The volumes were higher last week and registered a second successive distribution week. Earlier in 2010, 2015, and 2020, the Index had corrected more than 25 per cent. Now, post-Covid Crash of 39 per cent, the Index is in the five-year cycle. In any case, the Index failed to bounce strongly from the current levels to the new top, expect the Category-2 correction of at least 25 per cent. The downside targets are placed at 22,557 and 21,679. Below this, the 4th June low of 21,281 is the crucial support. If the Category-2 correction is a reality, the Index will fill the 4th December 2023 gap by testing 20,291. With the 22.78 correction, it will be completed. Mostly, the base formation may happen around this level. Time-wise, this correction will be completed by May 2025. The next bull market will be an impulsive one, and the targets are open to 38,800, in 24 to 30 months. All the sectoral indices losing their momentum in RRG charts. The IT, Oil and Gas, Auto, and FMCG indices are in the leading quadrant, but lost their relative strength and momentum as well. These sectors may outperform the broader market.

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