Nifty traded in a tight range of 18,442-18,210 to eventually settle with marginal losses this past week. On the daily chart, the NSE barometer formed a bearish candle with a long lower wick, suggesting selling was bought into. On the weekly scale, it was the first in seven weeks when the index formed a bearish candle, but it continued with its higher low formations. Some fatigue is visible and analysts see support for the index in the 18,250-200 range, followed by 18,100. They find the 18,400-450 range as the key near-term hurdle for Nifty.
“The short-term momentum indicators have been showing negative divergence, which is a sign of weakness and the price action is expected to follow the suit. Nifty is expected to tumble towards 18100-18,000 in the short term. On the higher side, 18,450 has been acting as a resistance for the index and will continue to act as a cap for the short term. The broader end of the market is expected to see a deeper cut in the short term,” said Nagaraj Shetti of HDFC Securities.
Chandan Taparia of Motilal Oswal Securities said the long lower wick on the daily chart suggested a support-based buying at the 18,200 level. This analyst noted that the index has been forming higher lows for the last seven weeks.
Nifty has to hold above 18,250 for an up move towards 18,444 and 18,600 levels, he said, adding that supports for the index are placed at 18,188 and 18,000 levels.
The index closed the day at 18,307.65, down 36.25 points or 0.20 per cent. For the week, the index edged 0.23 per cent lower.
“Directional movement in Nifty still remains Bullish. MACD is in a buy mode and moving averages are also suggesting that the uptrend is intact. Any broad-based market cannot remain in a low volatility phase for a prolonged period of time. Sooner or later. Nifty will see a directional movement. The underlying direction remains up. A break above 18,500 will lead the Nifty higher to 19,000-19,200. As long as Nifty trades above 18,250, we would remain on the long side,” said Independent Analyst Manish Shah.
Amol Athawale, Deputy VP for Technical Research at Kotak Securities said that intraday reversal formations and bearish candles on weekly charts indicate indecisiveness among the bulls and bears.
“But the medium-term index formation is still on the positive side. Hence, buying on short-term corrections and selling on rallies would be the ideal strategy for traders. The level of 18,200 would act as a key support zone. The level of 18,400 and 18,550 could be important hurdles. The uptrend would be vulnerable below the 18,100 level,” Athawale said.