Broker Street Week Next: Use any technical rebound as an opportunity to save profits

Indian equity markets remained under pressure in the last five sessions,
Witness weakness throughout the week. The Nifty 50 faced resistance at the key level and struggled to find strong legs as the critical support zone tested on two different occasions.

Market volatility has increased significantly, India VIX has increased by 9.72%
Since 15.02, the signal increasing uncertainty. The index has been moved to a trading range of more than normal of 793.75 points, reflecting increased instability. By the end of the week, the Nifty reported a net weekly loss of 630.70 points, which is similar to a decrease of 2.68%.

The next week is of significant importance as the index is approaching critical technical levels. The mark of 22,800 is especially crucial, as the pressure of further damage is likely to be invited to any critical violation of this support. Side is expected to be strong, 23,500 and high levels of strong resistance, which is also unlikely for the best technical rebounds to move from this point. The market reaction at 22,800 levels will play an important role in determining its short -term route. The breach of this layer can open the door of extra weakness, exacerbating sales pressure.

Given the current conditions, new trading can be subdued during the week. The immediate resistance level is expected to exit at 23,150 and 23,400, while the key support level is located at 22,700 and 22,450. These levels will serve as crucial markers in evaluating the directional bias of index in the next few sessions.

From a technical point of view, the relevant Strength Index (RSI) on the weekly chart is 40.40, which forms a 14-period low and shows clear bearish diversion. This indicates weakening the motion and indicates that the market spirit remains fragile.

A detailed pattern analysis suggests that the Nifty faced resistance to a 50-week moving average and then resumed the following speed. The inability to sustain the benefits above this critical moving average strengthens widespread weakness in the market constitution. If the index slips below 22,800, it may decrease further, which potentially leads to the correction of the ER plague in the near term.

Market participants should contact the coming sessions with caution, with regard to the overall technical setup. The 22,800 level is a major main, and any critical breach can accelerate the pressure of sales. Given the prevailing conditions, it is advisable to use any technical rebounds to save profits rather than aggressively chasing fresh long conditions. New purchases with strong emphasis on risk management should be carried out selective. Leverage exposure should be kept at a modest level to explore increased instability effectively. The market spirit is showing delicate and negative risks, guaranteeing a very careful approach in the near term.

In our appearance on related rotation graphs, we compared different sectors against the CNX 500 (Nifty 500 index), representing more than 95% of all the shares listed.

Related Rotation Graph (RRG) shows that the Nifty Financial Services Index has returned within the leading quarter. In addition, the Nifty Bank Index is the only index that is within the leading quadrant. These groups can continue to move on relatively wide markets.

Nifty Services Sector Index and Pharma Index weaken
Quadrilateral However, they are found to improve their relative pace. Apart from this, the midcap 100 and the IT index are within the weak quadrant.

The media index is slipping within the Legging Quadrilateral with the PSE and the realty index. They can reduce relatively wide markets. The index of the ENERGY area is also within the legging quadrant, but its relative pace is improving.

Nifty commodities, consumption, FMCG, auto and metal index correction are within the quadrant. They can continue to improve their related influence against widespread markets. The PSU bank index is also within the correctional quadrant, but it is left fast, and it is expected to reduce the relatively widespread Nifty 500 index.

Important Note: RRGTM charts show the relative strength and motion of a group of stocks. In the above chart, they show relevant performance against the Nifty 500 index (extensive markets) and should not be used directly as signs of purchase or selling.

Milan is the founder of Vaishnav, CMT, MSTA, Consulting Technical Analyst and EquitySarch.Scia and Chartwizard.AE and located in Vadodara. It can be reached at Milan.Shishnav@equityresearch.asia