Nifty on Friday formed indecisive candles on the daily and weekly charts. Analysts said the 50-pack index has been facing strong resistance at the 17,800 level, even as it is holding above its supports well. The trend is likely to be sideways to positive in the near term, they said, adding that a breach of the 17,700 level could trigger some weakness towards the 17,500 level.
Independent Analyst Manish Shah said the trend-following indicators are stilling show an uptrend. “In the last four days, Nifty traded in a narrow band of 17,850-17,650. A break above 17,850 will lead Nifty towards 18,000-18,100,” he said.
Rupak De, Senior Technical Analyst at LKP Securities said the index has failed to give any directional move and felt the trend may remain sideways-to-positive. On the lower end, supports are visible at 17,700 and 17,550 levels, he said.
On Friday, the index closed at 17,786.80, up 49.85 points or 0.28 per cent. For the truncated week, the index was up 1.2 per cent.
Sameet Chavan of Angel One said the market failed to capitalise on all head-starts, as the 50-pack index saw challenges around the 17,800 mark. On the other hand, the bulls were successfully able to defend 17,600, which made the weekly range shrink to merely 200 points, he noted.
“The market has opted to take a breather before unfolding the next leg of the rally. As far as supports are concerned, 17,600-17,500 are to be treated as key levels and till this time there is no reason to worry for. On the flip side, it’s a matter of time, we would see Nifty surpassing 17,800 to retest the psychological junction of 18,000,” Chavan said.
Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan said the 50-pack index has been trading near the 78.6 per cent retracement of the entire September decline.
The key Fibonacci level is near 17,800, he said while noting that Nifty failed to stretch beyond the level despite breaching it on Friday on an intraday basis.
“The hourly chart shows that the index is in process of forming a distribution near this key hurdle. The hourly momentum indicator has developed a negative divergence, which is a sign of exhaustion. The immediate support zone is at 17,720-17,700. Once that is breached, the index can tumble towards 17500 in the short term,” Ratnaparkhi said.