06:09
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Nifty stumbles close to 11400 as it continues to move in a downward trend. A bloodbath was observed as bulls were slaughtered on the back of negative global cues and multiple international and domestic factors. Most sectors were down by 1.5% to 2% as selling pressure intensified further post lunch as bears stronghold tightened to drag indices close to 11400, a point of inflection in the medium term.
A bearish flag was observed in price action on the Daily scale with consolidation between 11400 to 11600. A flag pattern, bearish, is a continuation pattern that is observed in between a trending market. Technically, 11400 is a strong point of support for bulls to safeguard the strength while a close below this level will open the floodgates for lower levels of 11100. Post three black crows, a swift move was seen on the upside while a follow up selling today reiterate the selling pressure on the upside.
Keeping that in perspective, Support is now seen at 11400 – 11380 and below that on a breach may extend to 11110 – 11150. On the upside, bulls would need to breach the resistance placed at 11600, previous swing top. Derivatives data too suggested liquidation on the long side of Calls of strikes 11500 – 11600 while puts have seen an addition on strikes of 11400 – 11500.
Rising crude oil prices, Global trade war tensions, and a possible cut in India’s subsidies are aiding further to negative sentiment that is built up. We remain cautious as this is an overdue timewise correction which is required at the moment. A consolidation at any levels for a few number of days will make us have a positive view in the medium term while in short-term we suggest to stay off the long side and close below 11390 will see sell on the decline as a momentum strategy.
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Posted in: Indian Market Tips
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