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Daily Technical View on Nifty

Market: Observation

• Markets ended sharply lower on Thursday after a weak opening. The losses came after three sessions of gains. The Nifty finally lost 219.8 points or 1.24% to close at 17,560.2. 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 uptrend intact

• Zooming into 15 minute chart, we see that Nifty opened lower and gradually corrected during the day. In the process, the 20 period MA has moved below the 50 period MA, implying a negative MA crossover.

With the Nifty also breaking its near term supports, the very near term trend has turned down. Nifty could now test next major supports of 17407-17244 in the next 1-2 sessions.

Nifty: Daily chart shows bulls are in control

• Though Nifty has corrected today, daily chart indicates Nifty has reversed its recent downtrend as it has recently crossed the previous swing high of 17309 and has closed above 50 day SMA.

• The 14-day RSI too has made a higher bottom, bounced back and closed above its 9-day EMA.

• We therefore expect the Nifty to bounce back after a short correction and gradually move higher in the coming sessions. It is important that on any corrections, the short term trend reversal levels of 17244 hold.

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