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Daily Technical View on Nifty

Market: Observation

* Markets ended with modest gains on Wednesday. Nifty finally gained 34.6 points or 0.14% to close at 25,052.35. Broad market indices like the BSE Small Cap index ended lower, thereby underperforming the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Nifty: Short term uptrend looking tired

On Nifty 15 min chart, we can observe that Nifty initially climbed higher and made a new life high. But selling pressure emerged in the late afternoon session and curbed the gains for the day. In the process, Nifty has closed below the 20 period MA on the 15 min chart. Nifty would now need to hold above the recent lows of 24964-24874 for the near term uptrend to continue.

Nifty: Daily chart indicates uptrend could continue

* The daily timeframe indicates that Nifty has broken out of a range after consolidating above the 50 day SMA two weeks back. And is now trading at life highs. Nifty has also filled the two gap areas as it closed above it on Monday. However, with the index showing signs of tirednessit could consolidate for a while.

* Momentum indicators like 14-day RSI are at 65.28 and not overbought, which is healthy. We expect the Nifty to test new life highs after a brief consolidation. Our bullish bets will be off if Nifty corrects and moves below recent swing lows of 24964-24874.

* Sectorally, the stronger sectors are Pharma, Infra, IT and FMCG.

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