The Nifty index may reverse its bearish trend in the past weeks and bounce back this week as the benchmark index has formed a Long Legged Doji Candlestick pattern on the daily chart.
In the past week, Nifty had plunged more than 3 percent and settled at 17617.15 levels while Bank Nifty has corrected almost 2 percent to close at 37574.30, amid the Volatility index (VIX) that inched up by 14 percent.
Downfall in domestic equities last week followed the trend in global equities as fear of monetary policy tightening downgraded the sentiments.
On a four hourly chart, the benchmark index has failed to sustain below 38.2 percent retracement level, which acts as immediate support. However, the index has settled below 21&50 SMA with a negative crossover as well as a momentum indicator MACD & STOCHASTIC are trading with a negative crossover on the daily time-frame which suggests weakness in the counter.
At present, the Index has support at 17,450 levels while resistance comes at 17,800 levels. So this week, if the nifty index breaks 17,450, the downside move may continue till 17,300/17,200 levels while on the higher side above 17,800, can expect 18,000/18,200 levels.
Last week, all the sectoral indices ended in red, the Nifty IT saw the highest loss of 7 percent followed by the Pharma Realty, and Media sector in a week. On the stocks front Hero MotoCorp, PowerGrid, ONGC were the top gainers while HCL Tech, Bajaj Finserv, ZEEL were the prime laggards with an average loss of 10% on a weekly basis.
On global front, Nasdaq composite index witnessed a sharp correction of 7.5 percent, one of the biggest weekly corrections in the pandemic time. The downfall is US tech stocks was mainly led by the Netflix’s softer growth guidance in subscriber base coupled with elevated US treasury yields.
Going ahead, investors will keep a close eye on key events like US Fed meet, economic data, corporate earnings, budget announcement and COVID-19 situation.
As only 4-5 stocks ended in green this week in Nifty index, following broad-based correction, specific rationale on stocks won’t work.
(Ankit Pareek is Research Analyst, Choice Broking)
