Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing sharp weakness from the highs on Friday, Nifty slipped into decline amidst range movement on Monday and closed the day lower by 33 points. After opening on a negative note, the market shifted into a narrow range movement for the entire session. Minor upside recovery has emerged towards the end and Nifty closed near the highs. The opening down side gap has been filled completely.
A long bull candle was formed on the daily chart, which indicate a range bound action in the market at the support of 16900 levels. Nifty has been trading in a broader high low range of 17300-16900 levels and is currently placed at the support of lower range movement.
Nifty is currently placed at the valuation support and also 200 day EMA around 16900 levels. Previously, reasonable buying has emerged from this support and the market has witnessed minor upside bounce for 1-2 sessions. Hence, there is a possibility of another round of small upside bounce in the short term. But, the long term charts remains weak and the repeated testing of lower support and lack of strength to sustain the bounce could eventually results in a decisive downside breakout of the 17000-16800 levels in the near term.
Conclusion: The short term trend of Nifty remains choppy and the market is placed within broader high low range. Minor upside bounce could be expected in the next 1-2 sessions and the market could eventually turn down and retest the support and lower range. Hence, limited upside and higher possibility of decisive downside breakout persists in the market.