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Technical Outlook

Equity benchmarks extended losing streak for third session driven by risk-off sentiment in global markets amid concerns over growth. The Nifty closed the session at 16240, down 60 points or 0.38%. In the coming session, index is likely to open on a subdued note tracking mixed global cues. We expect, supportive efforts to emerge from key support of 16100. Therefore, after initial blip use dip towards 16102-16136 for creating long position for the target of 16211 In each of past six sessions index has formed lower high on daily time frame. For a meaningful pullback to materialize from current oversold readings, index need to decisively close above past two sessions identical high of 16400, else continuance of corrective bias amid elevated global volatility. Further, a decisive breach below immediate support of 16100 would lead to extended correction towards March low of 15700. We observe that past four weeks corrective move hauled daily and weekly stochastic oscillator in extreme oversold territory. Historically, post such lower reading, markets have witnessed technical pullback. Thus, we advise traders to refrain from creating aggressive short position.

Nifty Daily Chart

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