IGI Logo

Nifty: 15774

Technical Outlook

• The index witnessed a gap down opening tracking weak global cues and gradually inched southward. The daily price action formed a bear candle carrying lower high low, indicating continuance of downward momentum. In the process, index retested key support of 15700

• The index is currently poised at immediate support of 15700, which has been held on multiple occasions over past three months, despite elevated global volatility. Going ahead, on breach below 15700 possibility of extended correction towards 15400 cannot be ruled out. Meanwhile, for a pause in ongoing downward momentum, a decisive close above previous session would be a prerequisite. On the upside, 16200 would act as key hurdle as it is Monday’s gap down area (16202- 15878) coincided with 50% retracement of current decline

• We believe, from the broader structural point of view sentiment indicators are approaching their bearish extremes. Historically, such bearish extreme conditions posses distinctive nature of a technical pullback in subsequent weeks. The key observations on sentiment indicators are as follows (detailed charts are shown in next slide) :

• A) Historically, reading of percentage of stock above 200 DMA below 20 signifies oversold conditions and witness decent bounce in subsequent weeks. Therefore, current reading of 18 (which is lowest since March 2020) signifies impending pullback B) Empirically, net advance - decline below -450 signifies market sentiment at its bearish extreme, offers favourable entry points from medium term perspective. In current scenario, reading of -459 signifies oversold reading

• Going forward, for sentiment to revive, index needs to form higher high-low on weekly timeframe along with improvement in market breadth. Meanwhile, volatility would remain high ahead of US FOMC meet. We believe, strong support for the Nifty is poised at 15400 as it is confluence of: a) 61.8% retracement of CY-21 rally (13596-18604), at 15510 b) Since October 2021, the intermediate correction have not exceeded for more than 14%. In current scenario, 14% correction from April high of 18114 will mature around 15400

• The formation of lower peak and trough on the broader market indices signifies corrective bias. To pause the ongoing corrective bias, the broader market indices need to decisively close above previous session high. Else prolonged correction wherein broader market would relatively underperform the benchmark • In the coming session, index is likely to open on a negative note tracking weak global cues ahead of US FOMC meet. The formation of lower high-low indicates continuance of downward momentum. Hence, use intraday pullback towards 15788-15820 for creating short position for the target of 15703

NSE Nifty Daily Candlestick Chart

Nifty Bank: 33405

Technical Outlook

• The daily price action formed a bear candle with a lower high -low and a bearish gap above its head (33774 -34345 ) indicating extended corrective decline

• Index is currently placed around the crucial support area of 33000 , holding above the same will lead to consolidation in the range of 33000 -34500 . Failure to do so will lead to an extended decline towards March 2022 low od 32100 levels . Volatility is likely to be high in the coming sessions ahead of the US FOMC meet . • Index after sharp decline of 8 % in just two weeks has approached oversold territory with a daily stochastic reading of 17 . Going ahead, index need to start forming higher high -low in the daily chart for any technical pullback to materialize in the coming sessions

• The index has key support around 33000 levels being the confluence of the following technical observations :

• (a) The value of the rising trendline joining the lows of April 2021 (30405 ) and March 2022 (32155 ) placed around 33000 levels

• (b) The previous major low of May is also placed around 33000 levels

In the coming session, index is likely to open on a negative note amid weak global cues . Index is expected to trade with corrective bias as forming lower high -low in the daily chart . Hence after a negative opening use intraday pullback towards 33530 -34590 for creating short position for the target of 33270 , maintain a stoploss at 33710

Nifty Bank Index – Weekly Candlestick Chart

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

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