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Daily Technical View on Nifty

Market: Observation

* Markets corrected sharply on Tuesday after a negative opening. Nifty finally lost 208 points or 0.85% to close at 24,139.0. 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: Nifty is now in a downtrend

* On Nifty 15 min chart, we can observe that selling pressure was seen through the day. In the process, Nifty has moved and closed below Monday’s low of 24212. There was also a negative MA crossover as the 20 period MA moved below the 50 period MA on the 15 min chart.

* Nifty could now head towards the 24037-23893 levels, which correspond to the 50 day SMA and the recent swing lowss.

Nifty: Daily chart indicates downtrend could continue

* The daily timeframe indicates that Nifty remains in a downtrend after breaking the previous lows of 24210- 24074 early last week.

* And after a bounce back seen last week, Nifty has reacted from close to the 20 day SMA. This indicates stiff resistance at higher levels.

* Nifty could now test the 50 day SMA at 24037 and the recent swing low of 23893 in the coming sessions. A larger correction is likely if these levels fail to hold.

* Our bearish bets will be off if the Nifty breaks out of the recent highs of 24473. Sectorally, the strongest sector is Pharma.

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