Nifty Metal plunges over 2% as it witnesses major profit booking on Friday!
Nifty Metal emerged as the top underperformer among the sectoral indices as it fell about 2.08% and closed the week on a bearish note.
It was a disappointing trading session on Friday as Indian indices lost all the intraday gains and closed negatively. One of the prominent sectors that contributed to weak sentiment in the market was the metal sector. Nifty Metal emerged as the top underperformer among the sectoral indices as it witnessed major profit booking on Friday. It fell about 2.08% and closed the week on a bearish note. Vedanta (-6.79%), Hindalco (-4.40%), JSW Steel (-3.90%) and Tata Steel (-1.85%) were the top losers from the metals sectors.
From late February to mid-April, the index was seen as the only supporter of Nifty. It surged about 30% during this period when the broader index was going through a turbulent phase. Rising geopolitical tensions and an increase in demand led to higher cost of metals. However, the rally has fizzled out in just one month after, as the index has lost all its gains during this period.
The profit booking was so strong that the index fell about 12% during this week. Moreover, it plunged below its 200-DMA and currently lies nearly 9% below it. All the technical indicators indicate strong bearishness in the index. The 14-period daily RSI has plunged below 20. The trend indicator ADX has risen sharply over 30, indicating a strong downtrend. The gap between MACD line and signal line has widened and shows strong bearish momentum.
On the technical chart, the index currently lies at a make-or-break point. The level of 5300 happens to be a strong support level, from which the index has taken multiple supports before. The index has formed an inverted cup pattern. A fall below this level can see it moving towards the level of 5000. All the parameters are signalling strong bearishness, and it would be advisable to stay away from the metal stocks for now. A close above its 200-DMA shall bring positivity to the index.
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