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Daily Technical View on Nifty

Market: Observation

Markets ended sharply lower on Wednesday after a negative opening. Nifty finally lost 324.4 points or 1.36% to close at 23,559.05. 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: Downtrend intact

On Nifty 15 min chart, we can observe that Nifty has broken down from a range seen on Monday-Tuesday and has continued to move lower. In the process, nifty has broken the recent swing lows of 23816 and is now just above the 200 day EMA.

The 20 period MA also remains below the 50 period MA on the 15 min chart, indicating the near term downtrend is intact.

Nifty: Daily chart indicates more weakness is likely

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

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

While we expect lower levels in the coming sessions, with the Nifty hovering just above the 200 day EMA, there is a possibility of a temporary bounce back. Any pullbacks could find resistances at 23874-24005.

Most of the sectoral indices too are not showing any strength and have broken their recent supports. Only IT index is showing some strength.

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