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Daily Technical View on Nifty

Market: Observation

* Markets ended flat on Thursday after a volatile session. The Nifty finally gained 5.05 points or 0.03% to close at 16,682.65. 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: 15 min chart indicates downtrend intact

* Zooming into 15 minute chart, we see that Nifty opened with an upgap and moved higher in the morning session. However, selling emerged from the highs and pulled the index lower.

* The index therefore remains in a short term downtrend after breaking down from the 16824- 17415 trading range in the previous session. On the 15 min chart, the 20 period MA also continues to trade below the 50 period MA which indicates the negative moving average crossover is still intact. We therefore feel this is a sell on rise market till proved otherwise

Nifty: Daily chart shows downtrend likely to continue

* Nifty has been trending lower for the last few weeks and making lower tops and lower bottoms in the process. And Thursday’s intraday rise seems like a pullback rally after the recent breakdown from 16824-17415 trading range.

* With global cues too weak, we expect the downtrend to continue. Our short term bearish view would turn bullish only if the Nifty manages to take out the highs of 17133. Therefore recommend a go slow approach on fresh longs till we see signs of sustainable strength.

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