Nifty Cracks Below 17,400; Range-Bound Market Changing to Sell-On-Rise!

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After the benchmark, the Nifty 50 index formed a bearish divergence at the top, a negative view was formed which remains valid until the index breaches the divergence top and negates it. To this day, the high of 18,088.3 is intact and hence every rise is proving to be a good selling opportunity for traders. 

Today, the Nifty 50 closed below the support of 17,400 for the first time after 29 August 2022 which again conforms to the bearishness prevailing in the market. Till now, this level was intact and every dip near this level was faced with high demand but it seems like investors are finally giving up. 

The level of 17,200 has become more approachable than before amid today’s weak closing, which I discussed in last week’s analysis of whether the level of 17,200 would come first or 18,100. Although for the current monthly expiry, the data was pointing out to be a range-bound move with high volatility, today’s weakness might throw some surprises in the next week.

Image Description: Daily chart of the Nifty 50 (spot) with RSI at the bottom

Image Source: Investing.com

More importantly, in today’s fall, even the banking space has given up big time, which was the major pillar of the previous rally. The Nifty Private Bank index ended the session 2.62% down while the Nifty PSU Bank index lost 3.97% by the closing. Even the FMCG sector which provided investors a place to hide in yesterday’s weak session and is considered to be a defensive sector also fell 0.5% today. The heavyweight Reliance (NS: RELI ) also took a steep cut of 1.87% to INR 2,439.5.

The market-wide weakness is a very strong signal for an imminent downtrend. One of the major spoilers to the party for the bulls is definitely the record plunge of the Indian rupee against the US dollar after the US Fed’s 75 bps rate hike on 21 September 2022. After yesterday’s gigantic plunge of the rupee, the weakness continued today as well with an all-time low of around 81.33. That reflects a peak gain of around 1.43 in USD/INR in a mere two sessions. The last time we witnessed a similar decline in the rupee was on the day Russia declared a war on Ukraine, on 24 February 2022. If we don’t see stability in the rupee, then a further weakness in the Indian markets gains more credibility.

The India VIX has shot up by a massive 9.4% and closed above the 20-mark, at 20.59. It is the highest closing since 5 July 2022. This clearly reflects, traders are in for some more volatile moves in the coming days. Another big event that is coming up shortly is the RBI’s 3-day MPC from 28 - 30 September 2022 which would be closely watched by traders and the volatility is expected to remain high till the RBI’s decision on the rate hike.

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  • Avinash Singh @Avinash Singh
    nice article dear
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Thanks Avinash :)
      Like 0
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  • Ayush K Pal @Ayush K Pal
    Nifty never follow charts but global markets and economic data solely depend. Charts are created by indexes not by astrological prediction.
    Like 2
  • Ashok Ashok @Ashok Ashok
    hello
    Like 1
  • Ashok Ashok @Ashok Ashok
    hello
    Like 1
  • Asif Laigroo @Asif Laigroo
    Nifty will touch 15000 upto mid October 2022....
    Like 2
  • Asif Laigroo @Asif Laigroo
    Nifty will touch 15000 upto mid October 2022....
    Like 0
  • Asif Laigroo @Asif Laigroo
    Nifty will touch 15000 upto mid October 2022....
    Like 1
  • Asif Laigroo @Asif Laigroo
    Nifty will touch 15000 upto mid October 2022....
    Like 0
  • Navaldeep Sharma @Navaldeep Sharma
    volatility towards downside or upside?
    Like 0
    • Kannan Manivannan @Kannan Manivannan
      my view no downside pls check 1day chart is sideways only, when 17150 break and below close then only downside, otherwise 17150 to 18100 (sideways only)
      Like 1
    • Dinesh Sharma @Dinesh Sharma
      I think u r correct sir
      Like 0
    • Srinivasan K @Srinivasan K
      @Rohit Gupta downside
      Like 0
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