Technical View - Aug 23, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing weakness on Friday, Nifty witnessed high volatility on Monday and finally closed the day higher by 45 points amidst a see saw trade. Nifty opened on a sharp upside gap of 142 points, started to show weakness from the highs since early part of the session. The opening upside gap has been filled completely and the market recovered from the day's low of 16395 in the mid to later part of the trade.

A reasonable negative candle was formed with minor lower shadow. Technically, this pattern indicate a lack of strength to sustain the highs. Though, Nifty closed higher on Monday, the overall market breadth was sharply negative and broad market indices like mid cap and small cap segments have continued to bleed. This is not a good sign, as it reflect inherent weakness in the market.

Nifty sustained at the immediate support of 10 day EMA around 16400-16420 levels for the second consecutive session on Monday and that area has offered minor upside bounce from the lows. On any decline below this support, the Nifty could find another support of 20 day EMA around 16250 levels.

Conclusion: With weak inherent strength, the Nifty is unlikely to rally above the recent all time high of 16701 levels in the near term and the lower area of 16250-16400 could act as a crucial support for the market in the short term. Hence, one may expect a range movement in the next few sessions. Immediate resistance is placed at 16580.

Source : Equity Bulls

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