Technical view: Nifty breaches 17k; analysts point out weak structure of markets

Nifty extended its slide into the fifth consecutive session on April 19 as investors continued selling riskier equities amid concerns over inflation and imminent rate hikes.

Nifty opened at 17,258.95 against the previous close of 17,173.65 and touched intraday high and low of 17,275.65 and 16,824.70 respectively. The index eventually closed at 16,958.65, with a loss of 215 points, or 1.25 percent.

Nifty IT, FMCG and Realty indices fell 2.98 percent, 2.82 percent and 2.47 percent, respectively. Nifty Bank ended with a loss of 1.05 percent.

Technicals

Analysts are pointing weak structure of the Nifty as the index has breached the psychologically important level of 17,000.

Sumeet Bagadia, Executive Director of Choice Broking pointed out the Shooting Star pattern on the weekly chart suggests the index is on the weaker side. On the daily chart, the Nifty ended the session below the 200-day simple moving average (SMA), indicating the index can show more downside movement.

"RSI and MACD are suggesting negative crossover on the daily chart as well. According to Fibonacci retrenchment, the next immediate support is placed at 16,600. At present, the index is having support at 16,600 while resistance is placed at 17,300," said Bagadia.

Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in, observed that Nifty has breached its critical supports to settle below the 200-day moving average.

"At an intraday low of 16,824, Nifty tested the 200-day exponential moving average and bounced back. Hence, going forward, it remains critical for the index to sustain above 16,820 as a breach of this can drag it down further towards 16,500. As the trend seems to be on the downside, it looks prudent to remain neutral on the long side bets till some signs of stability are visible," said Mohammad.

Parth Nyati, Founder, Tradingo, pointed out Nifty has slipped below its important moving averages and psychological level of 17,000. However, 16,900-16,800 is another critical support zone that the bulls need to defend otherwise there may be more pain in the coming days.

"On the upside, 17,150-17,300 will act as an immediate supply zone while 20-DMA of 17,500 is a key hurdle," said Nyati.

As per Rahul Sharma, Research Head, Equity 99, 16,640 will act as very strong support for Nifty. After the breach of this, Nifty may touch 16,500 and if this level is also breached then the next stop will be around 16,400 levels. On the upside, 17,000 will act as very strong resistance.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint Genie.