Nifty 50 Forming a Narrow Range; Keep these Levels on Radar!

The Indian markets have largely digested the US Fed’s 25 bps rate hike with Nifty 50 taking a 0.44% hit to 17,076.9 on Thursday. While during the day, the markets also traded in the green zone for a decent time, the selling pressure finally dragged it lower by the closing. The major drag came from the PSU banking space, as banks are probably taking the worst hit during the ongoing rate hike cycle.

Now, as the downtrend is still on, with Nifty 50 yet to break its previous swing high of 17,800, the index seems to have started to trade in a range. Almost a 9% fall from the all-time high is luring investors at these levels which is keeping the index from falling further. Also, the US markets are stabilizing near the bottom which is what Nifty 50 is mimicking. The charts of both indices are very similar for the last few sessions.

Image Description: Daily chart of Nifty 50 (spot)

Image source: Investing.com

Another positive factor for Nifty is the strengthening rupee. We have seen a selloff in the dollar index in yesterday’s session as it fell below 102, and USD/INR has also taken a hit. The current USD/INR 24 March 2023 contract fell 0.52% to 82.23, tumbling to the lowest level since 14 March 2023.

Coming back to Nifty, the new direction seems sideways with still a bearish outlook. Resistance has been formed at 17,200 - 17,225 which is a major hurdle now. The index tried breaking this level 4 times in the last 8 trading sessions, denoting the significance of supply from here. Hence, as long as this selling zone is intact, traders should not expect a high upside.

On the lower side, 16,850 - 16,825 is a strong support level which is keeping the index from plunging, as of now. This range of 17,200 - 17,225 (resistance) and 16,850 - 16,825 (support) is the one traders can trade with counter-trend moves, i.e. buying the dips and selling the rallies.

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