It was the fourth day of a corrective decline in the Indian equities as the NIFTY ended the day with a loss on the fourth consecutive day. The markets saw a negative start to the trade. After a negative start, the NIFTY remained in the negative territory for the entire day; however, the morning session was spent in a range-bound manner while the markets showed resilience to the weakness. However, the afternoon saw a stronger corrective bout gripping the markets as the NIFTY saw a rapid decline which took it below the 17500-mark. A strong pullback followed in the last thirty minutes of the trade; the benchmark index ended the day with a net loss of 139.85 points (-0.79%).
From the technical perspective, it is important to note that the NIFTY has bounced off from the 50-DMA which presently stays at 17505 after a minor intraday violation. Also, on a closing basis, it has closed just a notch below the 100-DMA which stands at 17630. It would be extremely crucial for the markets to not only defend the 50-DMA but also crawl above the 100-DMA as soon as it can; it would be equally important for the NIFTY to also stay above these levels as well to avoid incremental weakness. The 50—dma and 100-DMA zone, presently between 17630-17505 remains a crucial support zone for the markets.
Monday is likely to see a jittery start to the day. The levels of 17665 and 17730 are immediate resistance points; immediate supports are seen at 17505 and 17450 levels.
The Relative Strength Index (RSI) is 46.64; it is neutral and does not show any divergence against the price. The daily MACD has shown a negative crossover; it is now bearish and below the signal line. A Doji emerged on the candles; its appearing following a steep decline hints at a potential base formation and some technical pullback. However, it will require confirmation on the next bar.
The pattern analysis shows that the NIFTY formed a lower top near the 18300 levels; it has seen a sharp corrective decline. In the process, the index has tried to find a base and defend the 50- and 100-DMA levels. The 50-DMA is presently at 17505; this is presently the most important support for the markets on the closing basis.
The NIFTY PCR across all expiries stands at 0.88; the markets are oversold on short-term continuous charts. There is a high probability that the markets may try and find a base for themselves. Some jittery start to the day is expected but it is likely that the markets return to their resilient performance. It is recommended that one stays selective while approaching the markets and in making purchases. While avoiding shorts at current levels, a cautiously positive outlook is advised for the day.
This was first published by The Economic Times.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)
