Barring Nifty Metal, all major sectoral indices closed in the red on Friday, with the auto, pharma, and realty sectors being the biggest losers. The advance-decline ratio was skewed toward decliners, with a ratio of approximately 2:1.
On the weekly timeframe, Nifty50 lost around 0.71% and formed a red doji candle, reflecting a lower-high and lower-low price structure. Auto (-2.55%), pharma (-2.05%), and FMCG (-1.96%) continued their downtrend, forming bearish candlesticks during the week. However, metal gained approximately 5.16% and formed a bullish candlestick on the weekly chart.
From a technical perspective, Nifty50 remains traded within a critical support range of 22,700–22,800, trending below all its key moving averages with a negative bias. The 14-day relative strength index (RSI) is trending downward and is currently positioned around 34. Additionally, the moving average convergence divergence (MACD) indicator has recently witnessed a negative crossover below the zero line. Similarly, the weekly RSI and MACD also show a downward slope, indicating a bearish outlook.
According to O’Neil’s methodology of market direction, we shifted the market status to a downturn, as Nifty breached its recent correction low of 22,725. Looking forward, we will shift the market to a rally attempt when Nifty closes in the green for the first time or closes in the upper half of the day’s range and stays above that low for three straight sessions. From there, a follow-through day would be needed before shifting the market back to a confirmed uptrend.
Looking ahead, the immediate strong support for the index is placed around the 22,800–22,700 range. A breakdown below these levels could further intensify the bearish sentiment in the coming days. Moreover, the index has struggled to close above the 23,000 mark for the past five trading sessions. Therefore, in the upcoming week, 23,000 will be a crucial level to monitor. A sustained move above this level could potentially trigger a bounce back toward 23,350–23,400.
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How Nifty Bank performed
Bank Nifty opened on a negative note on Friday and remained in negative territory throughout the session. The index formed a bearish candlestick pattern on the daily chart with a lower-high and lower-low price structure on the daily with a negative bias. The index formed two consecutive bearish candles and lost around 0.24% on a weekly basis. The index opened at 49,127.95, traded in the range of 49,306.55–48,764, and closed at 48,981.20.
The 14-day relative strength index (RSI) has slightly bent downward and is currently positioned at 43. The moving average convergence divergence (MACD) has turned with a negative crossover and is trending below its central line.
According to O’Neil’s methodology of market direction, we downgraded the market status to an ‘uptrend under pressure’ on Friday last week due to technical weakness and an elevated number of distribution days. We will change the status to a ‘downtrend’ if the distribution day count increases or if Nifty Bank fails to hold above the correction low of 47,898.35. On the flip side, the market status will be changed back to a ‘confirmed uptrend’ if the index retakes 50,641.75 (its recent rally high).
This major sectoral index is trending below all its key moving averages with a negative bias in the broader range of 48000–5000. A breakout or breakdown on either side may lead the index toward the same direction in the coming days. From a weekly trading perspective, strong resistance is placed around 50,000–50,500. However, strong support is placed in the range of 48,000–47,700.
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Stocks recommended by MarketSmith India:
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Affle (India): Current market price ₹ 1,549 | Buy range ₹ 1,520–1,560 | Profit goal ₹ 1,850 | Stop loss ₹ 1,430 | Timeframe 2–3 Months
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.