Near-term upside in Nifty capped at 10,300, say technical analysts

The market’s dream run could be nearing its end as the benchmark Nifty may find it difficult to breach the key resistance level of 10,300, which happens to be the 100-day moving average (DMA).

According to technical analysts, the Nifty’s upside could be capped around 10,300, while on the downside the index may slide below 9,700 if key support levels are breached. On Friday, the 50-share index closed at 9,973, posting its first weekly drop in four weeks. In the preceding three weeks, the Nifty had surged as much as 1,500 points, or 17 per cent.

“The sharp decline from last week’s high of 10,328 have resulted in dark cloud cover over weekly charts as the index failed to sustain at higher levels. In the current scenario, we believe, after the 38 per cent rally from the March low of 7,511 to the June high of 10,328, the index has entered a correction phase. Therefore, we expect upside will be capped at last week’s high of 10,300, and the index will extend its correction phase with the immediate support of 9,700 levels,” said Dharmesh Shah, head-technical, ICICI Direct.

Not just India but most global markets ran into rough weather last week on concerns over the rising Covid-19 cases and the US Federal Reserve’s assessment that the economic repair will be a long-drawn affair. Nagaraj Shetti, technical research analyst, HDFC Securities, believes the market could move in a tight range in the near term.

“Immediate supports to be watched around 9,900-9,880, and the next upside resistance after 10,000 is placed at 10150, which could be tested in the near term,” he said.

Last week, the Nifty twice attempted to breach the 10,300 mark. On both occasions, the index came off sharply after breaching those levels.

Shrikant Chouhan, executive vice president, equity technical research at Kotak Securities, too, is of the view that the market is set for a consolidation phase.

“The sharp fall from 10,300 levels suggests that bulls may start losing interest above 10,300. Hence, the strong possibility of a range-bound price action in the near term is not ruled out. For the short term, 9,850 should act as a trend decider level, above which we can expect uptrend wave up to 10,100-10,150 levels. However, trading below 9,850 could possibly open another correction till 9,650,” he said.

Experts said in the absence of strong domestic triggers, the markets will be guided by global cues and the action could shift to specific stocks. Also, foreign portfolio investor (FPIs) turning bearish could weigh on sentiment, they add.

FPIs have turned net-sellers in the previous three trading sessions, pulling out nearly Rs 3,000 crore. In the preceding nine sessions, they were continuous buying to the tune of Rs 24,000 crore.