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Daily Technical View on Nifty

Market: Observation

• Markets corrected on Tuesday after a positive opening. It was the second consecutive negative closing for the Nifty. Nifty finally lost 44.3 points or 0.19% to close at 22,888.15. 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: Caution warranted for very near term

• Zooming into the 15 min chart, we can observe Nifty opened on a positive note, but soon faced resistance and gradually came lower and entered into negative territory. We also observe that the 20 period MA has moved below the 50 period MA indicating a negative moving average crossover. This indicates that one needs to be cautious for the very near term until the Nifty can take out the immediate resistance of 22999. Nifty: Uptrend intact

• On the Daily chart, Nifty remains in a firm uptrend. Tuesday’s negative closing seems to be more of a breather after the recent sharp upmove. Nifty continues to hold above the 20 and 50 day SMA. 14-day RSI at 64.53 is rising and not overbought (though it has eased in the last two sessions), which is encouraging.

• While we expect further upsides and new life highs in the coming sessions in the run up to the election results, we remain open to volatile movements in the very near term. It will be important that the Nifty holds above the previous swing highs of 22795 for the uptrend to continue. Markets are likely to be volatile in the coming sessions as we approach the Election result announcements.

• While most of the sectoral indices are in uptrend, Media and Pharma are currently looking the strongest on the charts.

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