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Daily Technical View on Nifty

Market: Observation

* Markets ended lower on Monday after a gap down opening. A recovery from the lows helped to curb the losses. The Nifty finally lost 246 points or 1.4% to close at 17,312.9. 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: Short term trend is now down

* Zooming into 15 minute chart, we see Nifty initially opened with a down gap and broke down from its recent range in the process. While a recovery followed, the short term trend remains down.

* Further downsides are likely once the immediate support of 17467 is broken. Any pullback rallies could find resistance at 17380-17519 gap area.

Nifty:Daily chart shows index couldrise further

* On Daily chart, we observe that Nifty has broken the recent lows and closed below the 20 day SMA. Momentum readings like the 14-day RSI too are in decline mode.

* Further weakness towards the 17000 level is therefore likely once the immediate supports of 17280-17166 are broken.

* Our bearish view would turn wrong if the Nifty moves higher and convincingly crosses the immediate resistances of 17686-17727.

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