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Daily Technical View on Nifty

Market: Observation

Markets ended with modest gains on Tuesday after a positive opening. Nifty finally gained 64.7 points or 0.28% to close at 23,518.5. Broad market indices like the BSE Mid Cap and Small Cap indices gained more, thereby outperforming the Sensex/Nifty. Market breadth was positive on the BSE/NSE.

Nifty: Tuesday’s highs need to be taken out

On Nifty 15 min chart, we can observe that Nifty opened on a positive note and moved higher. But selling pressure emerged in the afternoon session and erased the morning gains.

In the process, Nifty has closed below the 20 and 50 period MA on the 15 min chart, indicating the bears have an upper hand unless Tuesday’s highs are convincingly taken out.

Nifty: Daily and Weekly chart indicates market could bounce back soon

Daily timeframe indicates that while the Nifty has been continuously moving lower for 7 trading sessions after reacting from the 20 day SMA, the index is now near the 50 week SMA at 23304.

The 50 week MA usually acts as a strong support, which means that downsides could be limited and Nifty could bounce back soon, at least temporarily.

Momentum indicators like the 14-day RSI too are in oversold levels, which increases the probability of a bounce back. Any pullbacks could lead to the Nifty testing the resistances at 23781-23874. We would however turn bullish only if Tuesday’s highs of 23781 are taken out convincingly. Till then we stick with our trend, which is currently down.

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