Will Nifty test 23,800 or jump back to 24,500? Tech analysts decode charts

Technical analysts believe that the Nifty is showing mixed signals on the short-term chart amid the renewed US-Iran war worries and high oil prices. Here are the key levels to watch out for.

The NSE Nifty 50 index ended 159 points or 0.66 per cent lower at 24,052 on Tuesday on the worries of an escalation in West-Asia conflict and a sharp rise in crude oil prices, which topped $87-mark yesterday.  In doing so, the Nifty on the technical charts formed a bearish candle resembling an inverted hammer with a long upper wick, trapped within the range of the July 8 candle, says Om Mehra, technical research analyst at SAMCO Securities.  The intraday chart structure indicates a mixed trend, believes the analyst.  "On the hourly chart, the Nifty has been forming an inverted saucer pattern; however, it continues to hold above the hourly Supertrend. The index slipped below its 20-day SMA but continues to hold above the 50-day SMA, indicating a mixed trend," explains Mehra.  Echoing a similar view, Nagaraj Shetti, senior technical research analyst at HDFC Securities notes that a small candle was formed on the daily chart with long upper shadow, placed beside the long bull candle of Monday.  Technically, this pattern signals an inside day type formation amidst range movement, says Shetti.  The analyst from HDFC Securities expects the short-term trend for Nifty to remain choppy with a weak bias, but adds that the near-term uptrend status remains intact. Shetti says, on the way up, the Nifty could encounter strong hurdles around 24,300 and 24,500 levels in the short term. Adding that, next lower support to be watched is around 23,800 levels.  Ponmudi R, CEO of Enrich Money reckons that the Nifty could open on a steady note on Wednesday, as indicated by the GIFT Nifty which quoted around 24,050 levels in early trade.  However, he cautions that the underlying sentiment is likely to remain cautious as geopolitical tensions in the Middle East continue to dominate investor focus.  "Persistently higher oil prices are expected to remain a key headwind for import-dependent economies such as India by adding to inflationary pressures and concerns over the current account deficit," says Ponmudi.  From a technical standpoint, the analyst sees 24,200 as the immediate resistance for Nifty. A decisive and sustained move above this level would improve market sentiment and could trigger a recovery towards the 24,300–24,400 zone, says the analyst.  On the downside, 24,000 continues to act as a critical support level. A sustained break below this mark could invite renewed selling pressure, exposing the index to the 23,900–23,800 support region, Ponmudi adds.  Dhupesh Dhameja, derivatives research analyst at SAMCO Securities believes that the Nifty is likely to remain range-bound between 24,000 and 24,300. As long as the Nifty sustains above the crucial 24,000 support zone, the broader bias is expected to remain constructive, with consolidation likely before the next directional move.  The Nifty would need a decisive close above 24,300 to revive bullish momentum and pave the way towards higher levels, while a breakdown below 24,000 could trigger fresh profit booking towards the 23,750-23,800 support zone, says Dhameja.  Disclaimer: Views and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Reader's discretion is advised.