market outlook: Technological view: Nifty defends 16,400 support; avoid bottom fishing, analysts say
Nifty 50 opened on a negative note at 16,469.60 and dropped to as low as 16,347.10. However, at the lows, buying appeared to take the index to a high of 16,487.25. It ended down 153.20 points, or 0.92%, at 16,416.35.
“Technically, the pattern signals a weak trend with range bound action. Nifty is currently placed on a break below the critical support of 16,400 levels (support follows the change in polarity and the 10 and 20-day EMAs daily). But small buying is still emerging from the lows,” said Nagaraj Shetti, Technical Research Analyst.
Markets are awaiting momentum from the RBI’s mid-quarter policy review meeting, which is expected to decide on monetary policy tomorrow, analysts said. A negative outcome could cause further weakness and any positive approach or status quo could get the bulls active again.
Analysts note that the positive streak of higher tops and lower lows remains intact according to the daily chart.
“Nifty’s short-term trend continues to be negative. With the formation of small negative candles with shadows below and the placement of important supports, one can expect Nifty to see a likely sustained upside from the 16300-16250 low in the near future, Shetti said. Next 1-2 sessions”.
Sameet Chavan, Director of Technical Analysis and Derivatives, Angel One, feels it is yet another “boring” day for the market as market participants are choosing to be a little cautious on monetary policy. RBI is expected in the upcoming trading session.
Amid the stagnation, Nifty managed to successfully defend the 16,400 key support level on a closing basis and the way some heavyweights recovered in the last few minutes of trading, certainly an encouraging thing. rule, Chavan said.
“In the event of any favorable outcome from the RBI we could see Nifty reclaim the 16,600-16,700 level; whereas conversely, any disappointment will lead to a break of the key supports placed around 16,400-16,300. ”
Ruchit Jain, Research Team Leader,
5paisa.com, thinks that weakening market breadth is a negative sign in the short term. On the hourly chart, Nifty has resumed its ‘Lower Top Lower Bottom’ structure after the recent retracement suggests that the market has resumed its near-term downtrend, he added.
Jain recommends that traders avoid bottom fishing and treat any bullish move due to the event as a mere turn around and seek to shed light on the long periods in such bullish moves. .
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not represent the views of the Economic Times)