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Below is the Daily Market Wrap Up By Mr. Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd

Some respite globally leads Nifty back to 15700

The previous week’s brutal knock was followed by a muted start on Monday. However, markets immediately resumed their downtrend and slid towards the lows of 15200. Fortunately, the picture improved slightly on the global front which led to a smart recovery from lower levels on the same day. In fact, in the subsequent session, our markets had a decent relief rally to retest 15700. Around the mid-week, we did feel some tremors, but fortunately, bulls were prepared this time to cushion the markets around key supports. In the latter half of the week, we witnessed good broad-based participation to conclude at the highest point of the week around 15700.

Our markets had a terrible week as we lost more than 5% to close at 12-month lows. Things were looking extremely bleak at the start of the week gone by; but fortunately, the oversold market did get much-needed aid from the global markets. We are back to 15700 which was the recent breakdown point and hence, the market has now entered a corridor of uncertainty. Although the previous week’s sharp correction was intimidating, we were not convinced about a possible extended correction this week. In fact, we had mentioned a couple of observations like Nifty reaching the previous breakout point of May 2021 around 15400 – 15300 and the ‘Positive Divergence’ of the ‘RSI-Smoothened’ oscillator on the daily chart (i.e., lower lows in recent prices and higher lows in the oscillator). Yes, we agree with the fact that we are still not out of the woods yet and till the time Nifty does not surpass its major hurdle of 15900 – 16000 on a closing basis, one should avoid aggressive bets on the long side. Hence, it would be interesting to see how the market behaves in the first half of the forthcoming week. If global relief extends, we may see the Nifty surpassing the 16000 mark and this would certainly trigger a sharp short-covering rally in the market. Before this, 15800 – 15900 – 16000 is to be considered a cluster of resistance.

On the flip side, the immediate supports are placed at 15500 – 15350 – 15200. We would also like to highlight one thing, if Nifty manages to close beyond 16100 next week, it will confirm its quarterly close above ‘5-EMA’. The significance of this development is, historically, whenever the benchmark index closed below this key average on the quarterly chart, it triggered a sizeable correction after that. The last time it had happened was in the initial covid fiasco and before that way back in 2011. Hence looking at the broad-based relief this week, we remain hopeful on market obliging to this historical observation.

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