Has Nifty bottomed out? Tech analysts decode charts; flag key levels

Technical analysts flag presence of multiple hurdles in the 24,000-24,200 region for the Nifty; on the downside, they expect immediate support at 23,800.

Benchmark equity indices drifted lower in recent trading days amid concerns over high oil prices and a spike in global bond yields. For the week thus far, the BSE Sensex was down 1.44 per cent or 1,112 points at 76,153. The NSE Nifty 50 index shed 1.25 per cent or 303 points at 23,873. However, positive cues from global markets following easing bond yields are likely to lift market sentiment Friday morning. Overnight, the US markets - Dow Jones, NASDAQ and the S&P 500 surged more than 1 per cent each. This morning in Asia, Nikkei advanced 0.5 per cent, and Kospi jumped over 1 per cent. GIFT Nifty quoted around 24,020 levels as of 07:20 AM. "Indian markets are expected to begin the session on a firmer footing, supported by Wall Street's overnight rebound and gains across Asian equities as easing global bond yields provide some relief to risk assets," says Ponmudi R, CEO of Enrich Money.  Adding that the US Treasury yields retreated after Federal Reserve Governor Christopher Waller suggested that another rate hike may not be necessary if upcoming inflation data remains moderate. The analyst, however, cautioned that on the geopolitical front, the US-Iran conflict remains elevated, with both sides continuing to exchange strikes and no clear signs of meaningful de-escalation. "The prolonged uncertainty surrounding the conflict is likely to keep investors cautious, sustaining volatility across global financial markets while leaving crude oil prices highly sensitive to further developments," says Ponmudi.   

Nifty outlook

 From a technical perspective, Ponmudi flags the 24,000–24,200 region as the immediate resistance zone for the Nifty. Adding that, the 24,000 psychological mark is particularly important, as the index has struggled to sustain moves above this level. The analyst believes that a sustained move above 24,200 would be required to stabilize the near-term structure, while a decisive breakout above 24,400 would strengthen bullish momentum and signal a more meaningful recovery. 

 

 

 Meanwhile, Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking flags that the daily stochastic has approached oversold territory, and buying demand is seen emerging in Nifty from the key support area of 23,800–23,600. Hence, a pullback towards the 50-day EMA placed around 24,150 cannot be ruled out in coming sessions. Nagaraj Shetti, Senior Technical Research Analyst cautions that the underlying trend of Nifty continues to be weak amidst choppy trends. In case of a dip below 23,800, the analyst fears the index could dip to 23,600 levels. On the upside, Shetti sees immediate resistance placed at 24,100 levels. Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities highlights that the Nifty remains below its declining 10-DEMA, positioned near 24,081, maintaining pressure on the near-term structure.  "The Relative Strength Index (RSI) stands at 37.11, below its RSI average of 45.27 and the neutral 50-mark, indicating that momentum remains weak and has yet to show a convincing reversal," explains Dhameja. On the downside, as long as 23,800 is protected, the analyst believes that buyers may continue to absorb selling pressure and attempt a recovery from lower levels. "On the upside, a sustained move above 24,000–24,050 would be required to alter the immediate setup and could trigger mild short covering towards 24,180–24,250," says Dhameja. Disclaimer: Views and outlook shared on the stocks/ market indices belong to the respective brokerages and are not endorsed by Business Standard. Readers' discretion is advised.