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Daily Technical View on Nifty

Market: Observation

Markets moved down further on Thursday after the weakness seen in the afternoon session of Tuesday. Nifty finally lost 168.6 points or 0.72% to close at 23,349.9. Broad market indices like BSE Mid Cap index lost less, thereby outperforming the Sensex/Nifty. Market breadth was negative 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 negative note and moved lower. A recovery from the lows helped to curb the losses for the day.

The near term trend nevertheless remains down. And the Nifty also trades below the 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 the last two weeks after reacting from the 20 day SMA, the index is now near the 50 week SMA at 23301.

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 23507-23781. 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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