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Daily Technical View on Nifty

Observations

* Nifty broke the four week winning streak by falling 3.5% week on week. Nifty IT, Healthcare and Pharma indices underperformed the Nifty by falling 7.14%, 5.73% and 5.16% respectively. Nifty energy was the only Index which closed in green last week. BankNifty outperformed the Nifty by limiting its losses to 2.07%. Nifty Midcap and Smallcap indices plunged more than 4%.

* In last four sessions, Nifty plunged 865 points from the high of 18350.

* Nifty has closed below its 20 and 50 days EMA supports, placed at 17796 and 17622

* If we were to consider the entire upswing seen from 16410(Bottom Made on 20 Dec 2021) to 18350(Top registered on 18th Jan 2022), Nifty has already retraced more than 38.2%. Next supports from Fibonacci theory comes in at 17380 and 17151, which happens to be 50% and 61.8% retracements of the swing. 50% retracement support is also coincides with 100 days EMA support, placed at 17360 in Nifty

* Medium term bullish trend is expected to get negated below 17151.

* Nifty Smallcap and Midcap indices have registered bearish engulfing pattern on the weekly chart, which could put small stocks under pressure. It is recommended to reduce long positions in Smallcap and Midcap Segment

* Indicators and oscillators on Nifty and Smallcap Index daily charts have turned bearish, which confirms the down trend

* To conclude, We believe that short term trend of the Nifty has turned bearish. Pullbacks should be utilized to lighten long commitments. A level below 17151 in Nifty would confirm the medium term downtrend. Resistance for the Nifty is seen at 17950.

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