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Daily Technical View on Nifty

Market: Observation

• Markets ended sharply lower on Monday after a shaky opening. The Nifty finally lost 302.7 points or 1.73% to close at 17,213.6. Broad market indices like the BSE Mid Cap and Small Cap indices lost less, thereby out performing the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Nifty: 15 min chart indicates a downtrend

* Zooming into 15 minute chart, we see that Nifty opened on a shaky note and gradually corrected during the day. It was the third consecutive session of losses for the Nifty.

*  With the Nifty closing below the trend reversal supports of 17244, the short term trend is now down. On the 15 min chart, the 20 period MA is also below the 50 period MA, implying a negative MA crossover is still holding. Nifty could now test next major support of 17082 in the next 1-2 sessions.

Nifty: Daily chart shows bears are in control

• With the Nifty correcting for 3 consecutive sessions and closing below the 20 and 50 day SMA, the bears seem to have made a comeback.

• The 14-day RSI too has dipped below its 9-day EMA, indicating that momentum is weakening.

• We therefore expect the Nifty to correct further in the coming sessions. Any pullback rallies could find resistance at 17537.

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