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Daily Technical View on Nifty

Market: Observation

Markets corrected further on Friday after a weak opening. Nifty finally lost 51.15 points or 0.21% to close at 24,148.2. Broad market indices like the BSE Mid Cap and Small Cap indices lost more, thereby underperforming the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Nifty: Short term trend remains down

On Nifty 15 min chart, we can observe that Nifty has corrected sharply from the highs on Thursday and broken the previous swing lows of 24281. It then traded in a range and broke down from this range on Friday.

The 20 period MA also remains below the 50 period MA on the 15 min chart, indicating the negative MA crossover is intact.

More downsides in the very near term are therefore likely as long as the immediate resistance of 24277 is not taken out.

Nifty: Daily chart indicates weakness is likely

Daily timeframe indicates that while there was a strong bounce back recently from the lows of 23816, the sharp fall on Thursday from the 20 day SMA indicates that the bulls are not in control yet.

Momentum indicators like the 14-day RSI too have moved lower after their recent bounce back.

Our bearish bets will be off only if Nifty rises and crosses the highs of 24538.

Sectorally, only the IT index is showing some strength.

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