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Daily Technical View on Nifty

Market: Observation

* Markets ended with decent gains on Friday after a gap up opening. Nifty finally gained 89.25 points or 0.44% to close at 20,192.35. Broad market indices like the BSE Mid Cap and Small Cap indices gained less, thereby under performing the Sensex/Nifty. Market breadth was positive on the BSE/NSE.

Nifty: Closes below 20 period MA on 15 min chart

Zooming into 15 min chart, we observe that Nifty opened on a positive note and gradually climbed higher on Friday. However selling was seen towards the closing and the Nifty closed below the 20 period MA on the 15 min chart, which is a weak signal. Further downsides are likely once the immediate support of 20129 is broken.

Nifty: Uptrend intact, but short corrections possible

* On the daily chart, we can observe that after bouncing back from a low of 19223 two weeks earlier, the Nifty has gradually moved higher and taken out the previous swing high of 19584 and made new life highs in the process.

* The index is now comfortably trading above the 20 and 50 day SMA. Momentum readings like the 14-day RSI too are in rising mode and at 76.48 is not extremely overbought.

* Short term corrections are however possible and could find support near the recent low of 19914.

* In terms of strategy, we recommend a go slow approach with respect to fresh long positions till we see signs of sustainable strength. 

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