The Nifty index was extremely volatile over the past week, ending with a weekly loss of 1%. The 200-day moving average of the benchmark index has continued to be below it, therefore the trend is still bearish in the short- to medium-term. The RSI momentum indicator has crossed over and is declining. Support is set at 16750/16500 on the low end. 17200 is the level of resistance at the higher end.
Bulls and bears engaged in a fierce battle over the BANK NIFTY index, which resulted in the formation of a doji candle that symbolises uncertainty. The overall trend of the index is still negative, and below 39,000, the sell-off will become aggressive, sending the index further downward to levels around 38,000–37,500. Only once it closes over the 40,000-level will the bulls begin to gain momentum.
In the weekly chart, the Nifty Financial Services Index has dipped below the 50 SMA, indicating a negative trend. Additionally, before going deeper on the daily chart, the index ran into resistance at the 14DMA. The RSI momentum indicator has crossed to the downside. Support is set at 17,000/16,700 on the low end.
17,850 is the level of resistance at the higher end.
Throughout the week, the NIFTY IT experienced selling pressure, and aggressive selling pressure was noticeable from higher levels. The immediate barrier at 30,000 levels is where the index is still in a sell-on-rise mode. The index has broken through its prior swing low and provided a clear breakdown from the ascending trend line. The index may drop to 26,000 levels as a result of the downward movement.
On the daily chart, the stock has developed a bullish hammer formation and a bullish reversal candle. The stock has found support near its 200-ema, providing the bulls with some cushion. The oversold region of the momentum indicator RSI is beginning to reverse. Support for the stock is expected at 850, while 925/950 are possible upside goals.
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As the moving average is above the price, it has been in a decline for a few days. The 14DMA had served as resistance to the price increase on the daily chart. The stock has also dropped below the level of the most recent consolidation. The RSI momentum indicator has crossed to the downside. The stock may decline more in the near future towards 5250. At the upper end, 5800 shows resistance.
Senior Technical & Derivatives Analyst at LKP Securities, Kunal Shah is the author.
Disclaimer: Currency Veda disclaims responsibility for the opinions and suggestions expressed by the analysts.