A short but eventful week started on an active note but ended on a subdued note. Despite opening at a record high, the Nifty 50 index turned down and fell sharply in the latter part of the session. According to analysts, the index has formed a long bearish candlestick on the daily chart and a shooting star candlestick on the weekly chart indicating a temporary pause in the uptrend.
While technical charts make the sentiment a bit cautious, as long as the index remains below 24,855, a “sell on the rise strategy” can be adopted against the benchmark index, said Hrishikesh Yedve, vice president, technical and derivatives research, Asit C. Mehta Investment Intermediates Ltd.
Despite the sharp correction, “the index showed resilience by not dropping below the previous day’s low and closing above the 24,500 level,” said Avdat Bagkar, technical and derivatives analyst at Stoxxbox, who expects the index to hold support in the 24,500-24,200 range and maintain its bullish momentum.
Investors are remaining cautious ahead of the Union Budget, which is due to be presented by the finance minister on Tuesday and will indicate the next direction for the market. Earnings season will also pick up pace, which will lead to movements in certain stocks, according to Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services Ltd.
“It is also important to note that as the Budget week approaches, volatility indices are likely to increase as the India VIX is teetering on the brink of a consolidation breakout in the daily timeframe leading up to the Budget week,” said Osho Krishan, Senior Analyst, Technical & Derivatives, Angel One.
Meanwhile, analysts say the Bank Nifty index has been trading within the range of 52,800-52,000 levels for quite some time now. A breach of either of these levels will determine the future direction of the trend, said Vaishali Parekh, vice president, technical research, Prabhudas Lilladher.
Parekh said the next support is at 51,000 and the Nifty Bank index will be in the range of 51,000 to 53,700 on a weekly basis.
