
Sudip Shah, Head of Technical Research and Derivatives in SBI Securities
The benchmark Nifty Index started with a weak trend on the last trading day of the week and it continued to decline with the day climbing. Due to this, the process of its 6 -day lead stopped. This increase came due to GST reforms and improvement in S&P global ratings. 25 per cent of American tariff concerns have weakened the mercate sentiment. Meanwhile, White House business advisor Peter Navaro warned that the secondary tariffs on Indian goods would be applicable from August 27. Due to this, the Nifty went below the psychological level of 25,000 and closed down 0.85% to close at 24,870.
The benchmark Nifty Index broke its 6 -day lead on Friday and closed at a lower level on the daily chart. The index has created an evening star candle pattern on the daily chart, which is considered a bearish reversal signal. Interestingly, the formation of Evening Star Pattern on the Daily Chart coincides with 61.8% Fibonacchi Retresses of the previous downward move (25669-24337) from June 30 to August 8, which increases the chances of changing the trend downwards.
However, after the formation of the candle pattern, it will now have to wait for confirmation. If another lower closing is seen on Monday, then it may be confirmed that the current pullback is losing its speed and the seller is dominating the market. This can lead to the return of Mandadis in the market.
Talking about important levels, the zone of 24850-24800 will work for immediate support for Nifty. Nifty can fall to 24650 levels when going below 24800 levels. Whereas the zone of 25100-25150 at the top will work immediately for the index.
Banking benchmark index, bank Nifty, concerted in the first four trading sessions of the week in the range of 579 points. On Friday, it broke rapidly and closed down 1.09% to close at 55,149. The biggest contribution to this decline was HDFC Bank (-1.34%), Kotak Bank (-1.55%) and Axis Bank (-0.74%).
With Friday’s closing, Bank Nifty is now trading below both its important short term moving averages, 20 and 50 Dema. The Relative Strength Index (RSI) is tilted at the bottom, which is strengthening the feeling of recession in Idex.
Bank Nifty has been performing weaker than Nifty for about a month. This indicates this from the Falling Ratio Line on the Bank Nifty/Nifty Ratio Chart. Later, Zone Bank of 55000-54900 will serve as an important support for Nifty. Any Girat Nifty below 54900 levels can pull the Nifty to the level of 54500. After this, the level of 54100 can also be seen in the short. While upwards, the zone of 55800–55900 will act as an important resistance for the index.
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