IGI Logo

Nifty

* Nifty plunged more than 3% in the week gone by, while in for the month of February, Nifty registered the rise of 6.5%. Nifty hit an all time high at 15432 on 16th Feb and turned southward. From the recent top, Nifty has witnessed a fall of more than 6%, to close at 14529.

* PSU Bank, Metal, PSE, Energy and Commodity indices outperformed the Nifty and other sectoral indices. FMCG, IT, Pharma and Media Indices underperformed and closed in the red for the month of February 2021.

* After the recent fall from the highs, Nifty is now trading below its 5, 10 and 20 days EMA. By breaching the crucial support of 14635, Nifty has also confirmed the bearish formation of lower top and lower bottom on the daily chart.

* On 26th Feb 2021, Nifty formed bearish island reversal pattern on the daily charts. This formation usually leads to the sharp downside post breaking the low of the candle.

* Nifty is yet to break below the support of 55 days EMA, placed at 14315 odd levels. 55 DEMA acted as a bullish reversal during the correction seen before budget. There has also been the support derived from the upward sloping trend-line adjoining the major bottoms since March 2020 bottom on Nifty weekly charts. Trend-line support is currently placed at 14350 odd levels, which also coincides with the partially filled gap support placed between 14336 and 14469.

* India VIX has reached above 28, highest level for last eight months. VIX index has also started sustaining above its 200 DMA, which is bearish sign for the markets.

* RSI oscillator has given breakdown on the daily charts, while on the weekly charts it has developed big negative divergence. MACD has also given the bearish sign on daily and weekly time frames.

BankNifty

* Despite the ongoing weakness in the benchmark indices, Midcap and Small cap indices have not turned weak on any time frame till now. However, it would be advisable to remain cautious while taking long bets on smallcap and midcap stocks, as Benchmark indices have turned weak.

* BankNifty has formed bearish head and shoulder pattern on the daily chart, which projects the downside target of 32200 in the Index, which is more than 7% down from the current levels. Therefore, we expect financial sector to remain under pressure in the coming times. However, PSU banks are expected to remain resilient as compared to private banks and NBFCs

* Nifty PSE and CPSE Indices looks the strongest on the chart and stocks from these sectors can be accumulated on dips for generating yield over medium term.

* FMCG Index has shown healthy correction in last two months and now seems to be hovering at the long term trend line support. The index is likely to see relief rally from the current levels. Many FMCG stocks turned oversold on the weekly charts and can be accumulated at current levels.

* Nifty has entered the downward trend and expected to remain under pressure in the coming weeks too. There is a short term support which is placed in the zone of 14300-14350. However below 14300, we could see, Nifty accelerating the downward momentum towards the positional support of 13600, which happens to be the intermediate bottom on weekly charts.

* Strategy for the March month should be to adopt conservative approach in long positions. We expect Markets to remain in the bearish trend. Every bounce should be utilized to lighten the long commitments and initiate fresh short positions in Nifty. Below 14300, Nifty could slide towards 13600. Resistances for the Nifty are seen at 14900 and 15180 levels.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ000171337

Above views are of the author and not of the website kindly read disclaimer