Technical Wrap - Jan 28, 2022 - HDFC Securities

Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing a decent upside recovery from the lows in the last couple of sessions, Nifty failed to sustain the upmove on Friday, as it displayed high volatility and closed the day lower by 08 points. After opening on an upside gap of 98 points, the market continued with upside momentum in the early-mid part of the session. The sharp intraday weakness got triggered from the day's high of 17373 in the later half and the market has erased the entire intraday gains towards the end and closed lower. The opening upside gap has been filled completely.

A reasonable negative candle was formed on the daily chart with long upper shadow. Technically, this pattern indicate a rejection of bulls at the higher levels. This also reflects an inability of the market to sustain the highs.

After a sustainable upside recovery from a significant lower support of ascending trend line around 16850-16900 levels recently, the Nifty showing weak upside bounce is not a good sign, as the said support has acted as an important upside reversal in the past.

Nifty on the weekly chart has formed a long bearish candle this week, which is back to back for the last two weeks. The last two weeks decline has engulfed the previous three weeks upside bounce, there by forming a faster retracement on the down side. Hence, the positivity created after the recent upside bounce seems to have been dampened by the weakness of the last two weeks.

Conclusion: The underlying trend of Nifty remains choppy. There is no confirmation of any higher bottom reversal at the lows. The crucial support of uptrend line could be tested again around 16850-16900 levels by next week before showing another small upside bounce. The presentation of Union Budget 22 is likely to influence the market by next week.

Source : Equity Bulls

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TechnicalWrap Nifty Sensex HDFCSecurities