Will Nifty, Bank Nifty reverse the downtrend? Here's what tech analysts say

Pabitro Mukherjee of Bajaj Broking says that the Nifty is showing signs of a pullback after forming higher highs and higher lows on Thursday, and adds that the key hurdle stands at 23,600 levels.

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised. Equity markets are likely to start Friday's trading session on a positive note amid supportive cues from global peers. Elsewhere markets logged gains as crude oil prices retreated and US treasury bond yields eased. In the US, the S&P 500 and NASDAQ jumped up to 1.7 per cent in overnight trade. This morning in Asia, Nikkei and Hang Seng advanced 0.7 per cent each, while KOSPI rose 2 per cent. As of 7:40 AM, GIFT Nifty quoted around 23,345. Analysts reckon that the decline in oil offers some relief for the macro-economy, but caution against risks associated with high energy  prices. "The decline in WTI crude from its recent peak offers some relief on the macroeconomic front, but oil prices remain near the $100-a-barrel mark in international markets. That level is still high enough to keep investors guarded, given the potential impact on India’s import bill, inflation outlook and corporate margins," says Ponmudi R, CEO of Enrich Money. On the technical front, the analyst notes that the bias for Nifty remains cautious, with scope for a technical rebound if the index sustains above 23,400. CHECK Stock Market LIVE Updates  "A sustained move above 23,400 could improve momentum and open the way toward the 23,500-23,600 region, while failure to reclaim this zone could keep selling pressure intact," says Ponmudi. Meanwhile, Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking highlights that the Nifty formed a bullish candle with higher-high and higher-low signaling a pullback from extreme oversold territory on Thursday. "The ongoing consolidation around the 61.8 per cent retracement zone of the immediate swing (22,182–24,774) indicates a potential base formation at lower levels. With daily and weekly oscillators placed at an extreme oversold territory. Hence, a pullback cannot be ruled out in the coming sessions," explains Mukherjee. The analyst reckons that the Nifty needs to form higher-high and higher-low on a sustained basis and close above the 23,600 levels being the high of current week and recent breakdown area to signal pause in the current downtrend. In the case of Bank Nifty, Mukherjee notes that the index formed a small negative candle with a long upper shadow which looks like an inverted hammer on Thursday, indicating selling pressure at higher levels and distribution emerging around the 56,500 zone. "Bank Nifty failed to sustain above 56,500, resulting in consolidation within the 56,000–56,500 range as the index struggles to build sustained upside momentum," explains the analyst. Mukherjee believes that the broader structure for Bank Nifty remains cautious as it continues to trade below key resistance levels and is yet to establish a sustained Higher High–Higher Low formation. The analyst flags 55,700–55,800 as the immediate support zone; below which the index could resume the broader corrective trend toward 55,200 and 54,800 levels. On the upside, Mukherjee sees Thursday's high of 56,570 as an immediate hurdle; above which a recovery toward 57,000 seems likely.