NIFTY ANALYSIS AND INTRADAY PICK
NIFTY ON 04-08-2022
So finally NIFTY ended its winning streak and a sharp correction was observed from day high of 17490.70 which dragged NIFTY to 17161. It was nothing unexpected as all the indicators were indicating that NIFTY may correct from current levels at any point of time. Even in the previous two posts it was mentioned that traders must be cautious at higher levels as NIFTY is in overbought zone.
However, as sharp was the correction so was the recovery. NIFTY recovered sharply from the lower level.
The support came from IT and METAL which gained 1.24% and 1.21% respectively while BANK lost 0.62%.
NIFTY finally closed at 17382 with a negligible loss of 0.04%.
Technical View : (Daily Chart)
NIFTY has again made a outside day candle which generally indicates the extreme volatility in the Index as well as trend reversal.
NIFTY is moving above EMA 13, 21, 34 and EMA 21< EMA34<EMA13 which can be interpreted as the short-term trend is in the positive territory.
RSI is above 70 level (75.68) which indicates that NIFTY is still in overbought zone.
Support and Resistance : Daily Chart
17240-17157 will work as the support levels for NIFTY.
On the upper side NIFTY will face resistance in the range of 17492 to 17542 which is intact.
View for Traders:
Drawing a conclusion on the basis of technical analysis is getting very difficult. Why I am saying so? It has few endorsements. For now, the formation of Outside Day candle generally indicates reversal. However, the RSI has been oscillating in the limited range and has not come down from 75. It indicates that the Bullish momentum has not faded yet. But at the same time RSI indicates that that Index is in overbought zone. So, ideally a correction should take place.
These two signals are self-contradictory in nature and so making a unilateral opinion regarding the market action is next to impossible as one can’t be either Neutral, or positive or negative on the Index.
Furthermore, the MPC meeting tomorrow is making the traders nervous. However, the recent PMI data shows that India is moving towards a commendable GDP growth and Inflation has also stabilised. So one could expect a maximum 25 bps raise in the interest rate.
In my view, the choppiness will continue in the Index and one should trade the Index with intense discipline. Any casual approach may cause a great loss to the trader.
Keeping the current scenario in view it is recommended to buy NIFTY in the range of 17240-200 for a target of 16350-400 levels. SL can be put at any level below 17150 on closing basis.
The sellers must take a chance in the range of 17450-500 with a SL of above 17550. The target will be 17350 and 17300. Once the target is achieved the trade could continue with Trailing Stop Loss. ( This remains intact)
INTRADAY PICK FOR TOMORROW:
AURO PHARMA
Buy in the range of 581-583
Target: 596
SL 569
So finally NIFTY ended its winning streak and a sharp correction was observed from day high of 17490.70 which dragged NIFTY to 17161. It was nothing unexpected as all the indicators were indicating that NIFTY may correct from current levels at any point of time. Even in the previous two posts it was mentioned that traders must be cautious at higher levels as NIFTY is in overbought zone.
However, as sharp was the correction so was the recovery. NIFTY recovered sharply from the lower level.
The support came from IT and METAL which gained 1.24% and 1.21% respectively while BANK lost 0.62%.
NIFTY finally closed at 17382 with a negligible loss of 0.04%.
Technical View : (Daily Chart)
NIFTY has again made a outside day candle which generally indicates the extreme volatility in the Index as well as trend reversal.
NIFTY is moving above EMA 13, 21, 34 and EMA 21< EMA34<EMA13 which can be interpreted as the short-term trend is in the positive territory.
RSI is above 70 level (75.68) which indicates that NIFTY is still in overbought zone.
Support and Resistance : Daily Chart
17240-17157 will work as the support levels for NIFTY.
On the upper side NIFTY will face resistance in the range of 17492 to 17542 which is intact.
View for Traders:
Drawing a conclusion on the basis of technical analysis is getting very difficult. Why I am saying so? It has few endorsements. For now, the formation of Outside Day candle generally indicates reversal. However, the RSI has been oscillating in the limited range and has not come down from 75. It indicates that the Bullish momentum has not faded yet. But at the same time RSI indicates that that Index is in overbought zone. So, ideally a correction should take place.
These two signals are self-contradictory in nature and so making a unilateral opinion regarding the market action is next to impossible as one can’t be either Neutral, or positive or negative on the Index.
Furthermore, the MPC meeting tomorrow is making the traders nervous. However, the recent PMI data shows that India is moving towards a commendable GDP growth and Inflation has also stabilised. So one could expect a maximum 25 bps raise in the interest rate.
In my view, the choppiness will continue in the Index and one should trade the Index with intense discipline. Any casual approach may cause a great loss to the trader.
Keeping the current scenario in view it is recommended to buy NIFTY in the range of 17240-200 for a target of 16350-400 levels. SL can be put at any level below 17150 on closing basis.
The sellers must take a chance in the range of 17450-500 with a SL of above 17550. The target will be 17350 and 17300. Once the target is achieved the trade could continue with Trailing Stop Loss. ( This remains intact)
INTRADAY PICK FOR TOMORROW:
AURO PHARMA
Buy in the range of 581-583
Target: 596
SL 569
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