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Daily Technical View on Nifty

Market: Observation

• Markets ended with marginal gains on Monday after a weak opening. A strong bounce back from the lows erased the morning losses and ensured the Nifty ended in the green. Nifty finally gained 6.25 points or 0.03% to close at 19,434.55. Broad market indices like the BSE Mid Cap and Small Cap indices lost more, thereby under performing the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Nifty: Short term downtrend intact

• Zooming into 15 min chart, we observe that while Nifty bounced back sharply from a low of 19257 and ended in the green, the short term trend still remains down. The pattern of lower tops and lower bottoms seen since the last few sessions and the negative MA crossover (20 period MA below 50 period MA) is intact.

Nifty: May head lower

• On the daily chart, we can observe that Nifty has recently managed to hold above the crucial 50 day SMA and bounced back. However, considering the pattern seen in the larger weekly timeframe and the weakness seen in the key global indices, we believe the Nifty may eventually break the 50 day SMA and head lower towardsthe 20 week SMA at 18732.

• Our bearish bets would be off if the Nifty breaks out of the recent trading range of 19436-19646.

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