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Daily Technical View on Nifty

Market: Observation

* Markets ended lower on Thursday after a gap down opening. The Nifty finally lost 359.1 points or 2.22% to close at 15,808. Broad market indices like the BSE Mid Cap index lost more, thereby under performing the Sensex/Nifty. Market breadth was negative on the BSE/NSE

Nifty: 15 min chart indicates pullback is possible

* Zooming into 15 minute chart, we see that Nifty corrected further after a gap down opening. While we have been expecting a pullback rally, the index continues to move lower and remains in a downtrend. The 20 period MA on the 15 min chart also remains below the 50 period MA indicating the negative moving average crossover is intact.

* The Nifty is however near a major support of 15671, indicating there is a possibility of a bounce back in the very near term. Our view would turn wrong if the Nifty moves lower and breaks the support of 15671.

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 Nifty has been moving lower after the recent breakdown from 16824-17415 trading range.

* While we remain open to pullback rallies in the very near term, 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 16405. Therefore recommend a go slow approach on fresh longs.

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