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Daily Technical View on Nifty

Market: Observation

* Markets corrected on Friday after a positive opening. Nifty finally lost 65.9 points or 0.28% to close at 23,501.1. Broad market indices like the BSE Mid Cap and Small Cap indices lost less, thereby outperforming the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Nifty: Near term uptrend under threat

* On 15 min chart, we can observe that Nifty opened on a positive note but was unable to sustain at the morning highs and gradually came lower.

* There were some big red candles on the 15 min chart, indicating that selling was intense. We also observe a negative moving average crossover as the 20 period MA moved below the 50 period MA.

* A short term correction is likely once the immediate supports of 23412-23398 are broken.

Nifty: Short term correction is likely

* While the Nifty remains in an uptrend, the index is showing signs of tiredness as it was unable to sustain at the highs of Friday and corrected. The 14-day RSI is also giving negative divergence signals. While the Nifty has recently made new life highs, the 14-day RSI has made a lower top. This calls for caution.

* Most of the sectoral indices too are showing weakness. The Metal index is however one of the few indices that is showing strength.

* A short term correction is likely once the immediate supports of 23412-23398 are broken. It is important that previous swing low of 23206 is not broken. Else the current intermediate uptrend would reverse.

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