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Daily Technical View on Nifty

Market: Observation

• Markets bounced back strongly on Monday after a gap down opening. The Nifty finally gained 135.5 points or 0.81% to close at 16,793.9. Broad market indices like the BSE Mid Cap and Small Cap indices gained more, thereby out performing the Sensex/ Nifty. Market breadth was positive on the BSE/NSE.

Nifty: 15 min chart indicates strong resistance nearby

• Zooming into 15 minute chart, we see that Nifty opened with a down gap but soon recovered from a low of 16356 to take out the highs of the previous two sessions.

• On the 15 min chart, we can also observe that the Nifty is now once again near a downward sloping trend line which could act as a resistance. And with weak global cues, the index may correct in the very near term

Nifty: Daily chart shows index still in downtrend

• While the Nifty has bounced back in the last two sessions, the short term trend remains down.

•The recent rally therefore seems more like a pullback rally. We expect the Nifty to face resistance at higher levels around the 16844-17028 levels. The current downtrend would only reverse if the Nifty can convincingly cross the previous intermediate high of 17221.

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