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The weak sentiments of the Indian markets were quite evident in today’s session, as the benchmark index tanked 0.51% to 19,365.25. As per this closing, the index has fallen 626 points from the all-time high, which is not big of a correction, but definitely decent enough to halt the upward momentum, and it’s the lowest closing since 10 July 2023.
In the previous analysis of Nifty 50, I pointed out the lower low and lower high formation of the index to be one of the key reasons for being bearish on it. As of today, this formation is still intact, meaning, despite a consistent fall, there is no respite for bulls for now.
Image Description: Daily chart of Nifty 50 (spot)
Image Source: Investing.com
None of the index heavyweights – HDFC Bank (NS:) (14.3%), Reliance Industries (NS:) (10.42%) & ICICI Bank (NS:) (7.85%) are depicting enough strength to keep the index from falling as currently, a sector-wide selling is going on, especially after the RBI’s recent monetary policy committee’s (MPC) decision of imposing I-CRR of 10% on the banks to suck excess liquidity from the economy.
Now, structurally, the trend is still weak without a doubt. As long as the index does not break the falling trendline resistance on the daily time frame, long positions will likely be riskier than short ones. The level of 19,650 still remains the key resistance which I will be watching for the final confirmation of the trend reversal.
On the downside, the index is seeing some strong buying interest from the lower levels. It tried to penetrate 19,350 a total of 4 times in the past 10 sessions but was never able to close below it. The index is taking strong support from 19,300 – 19,350 and hence as long as a closing is not there below the lower end of this range, new short positions should not be created.
For the 24 August 2023 weekly expiry, the range of the index movement would probably remain between 19,300 – 19,650. These are key levels and a break of either of them will likely propel Nifty 50 in that direction.
Disclosure: I have multiple positions in Nifty 50.
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