From a structural point of view, the Nifty continues to remain in a bearish setup after failing to sustain above the crucial 24,500–24,700 zone, which is in line with the 100-week moving average and medium Bollinger Band region. The index slipped below the 50-week moving average placed near 24,985, keeping the intermediate trend under pressure. The broad price structure suggests that the market is currently trapped in a corrective formation from a broad consolidation with lower highs emerging on rebounds. The zone near 23,200-23,000 is an important support area; Any critical breach of this range can trigger a new leg of weakness towards lower levels. On the upside, markets will need a strong move above 24,300-24,500 to meaningfully correct the technical framework and revive directional strength.
ETMarkets.comNext week is likely to start with caution with volatility expected to increase. Resistance levels for Nifty are likely to come at 23,850 and 24,000, while support is seen at 23,350 and 23,150.
The weekly RSI remains at 41.46 and remains below the neutral 50 mark, indicating bearish momentum. The RSI does not show any significant bullish or bearish divergence against price at this stage and remains broadly neutral-to-negative in behavior. The weekly MACD remains below its signal line and remains in negative territory, continuing to reflect a weak underlying trend. The latest candlestick formation is like a bearish continuation candle, reinforcing the existing corrective bias.
Pattern analysis of the weekly chart suggests that the Nifty has failed to recapture the breakout area of the earlier bullish structure and is now trading below the key medium-term moving averages. The 100-week moving average near 24,538 has turned into an immediate overhead barrier, while the 200-week moving average near 21,990 continues to offer long-term structural support. Bollinger Bands have started to widen again after a brief contraction phase, suggesting the possibility of increased directional volatility in the coming sessions.
Given the current technical setup, market participants should continue to adopt a cautious and highly selective approach. Fresh aggressive buying should be avoided unless the index shows evidence of continued strength above the immediate resistance zone. Capital preservation and disciplined risk management will be important as volatility remains elevated. Traders should focus on stock-specific opportunities with tight stop losses while avoiding excessive leverage exposure. Next week is best approached with a defensive bias and a choice of selective participation rather than a broad-based offensive position.
In our look at Relative Rotation Graphs®, we compared various sectors against the CNX500 (NIFTY 500 Index), which represents more than 95% of the free-float market cap of all listed stocks.
ETMarkets.com
ETMarkets.comThe Nifty Metals and Infrastructure Index has slipped into the weaker quadrant. Individual stock performance may vary, but relative performance in these sectors will see a slowdown. The PSU Bank Index is also within the weakening quartile.
The Nifty Auto, Financial Services, Services Sector and Nifty Bank indices are dull within the lagging quadrant. These indices are likely to underperform the broader markets. The IT index is also within the lagging quadrant, but is seen improving its relative momentum against the broader markets.
Realty and FMCG indices are in the improving quadrant.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and Founder of EquityResearch.asia and ChartWizard.ae is based in Vadodara. He can be contacted at milan.vaishnav@equityresearch.asia
As a trusted and reliable news source
Add now!
(You can now subscribe to our ETMarkets WhatsApp channel)