scorecardresearchTechnical view: Nifty ends with a Doji formation; 17,000 a key level to watch for

Technical view: Nifty ends with a Doji formation; 17,000 a key level to watch for

Updated: 18 Apr 2022, 05:11 PM IST
TL;DR.

  • IT and bank stocks suffered strong losses today. Among the sectors, Nifty IT plunged 4.58 percent while Nifty PSU Bank and Financial Services indices closed 2.49 percent and 2.21 percent lower respectively. 

The stock-specific movement is likely to continue amid the earnings season.

The stock-specific movement is likely to continue amid the earnings season.

Nifty started the week with deep cuts as investors remained cautious amid the deepening Russia-Ukraine war, uninspiring quarterly numbers and soaring inflation.

Nifty opened at 17,183.45 against the previous close of 17,475.65 and touched intraday high and low of 17,237.75 and 17,067.85 respectively. The index finally closed at 17,173.65 with a loss of 302 points, or 1.73 percent.

Among the sectors, Nifty IT plunged 4.58 percent while Nifty PSU Bank and Financial Services indices closed 2.49 percent and 2.21 percent lower respectively. Nifty Bank index fell 1.96 percent.

Technicals

Nifty witnessed a sharp cut after an extended weekend. The fall can be attributed to weak numbers by heavyweights Infosys and HDFC Bank, a surge in energy prices, fresh worries about covid, rising inflation, and continued geopolitical tension.

The stock-specific movement is likely to continue amid the earnings season while global cues, commodity prices, and FIIs' behaviour will be important factors for the market.

"Technically, the Nifty ended with a Doji formation at a crucial juncture of 200 and 100-DMA which coincides with a 38.2 percent retracement of the previous rally therefore it will be important to see whether bulls manage to show confidence or not," said Santosh Meena, Head of Research, Swastika Investmart.

Doji candlesticks are formed when the open and close prices are equal. It signals indecision in the market.

"If Nifty manages to bounce back from here then we can expect a pullback towards 20-day moving average (DMA) of 17,500 while if it fails to hold its 200-DMA then 17,000-16,900 is the next important support zone," said Meena.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, pointed out that Nifty has formed gapping down Doji candlestick formation which suggests indecisiveness between bulls and bears.

"Direction wise, post sharp fall the Nifty is trading near 200 and 50-day simple moving average (SMA). We are of the view that the larger texture is still on the bearish side and a fresh pullback rally is possible only after 17,200. Above this, the pullback rally is likely to continue till 17,300-17,375. On the other hand, 200-day SMA or 17,150 would act as an immediate support zone for the traders. Below the same, the index could retest the level of 17,000-16,900,” said Chouhan.

As per Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in, it remains critical for Nifty to sustain above 17,000 and strength should not be expected unless it bridges the bearish gap, registered in today’s session, present in the zone of 17,237 and 17,457 levels.

"A close below 17,000 may initially drag the index down towards 16,840, where a 200-day exponential moving average is present. Therefore, for time being, it looks prudent to remain neutral on the index," said Mohammad.

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

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First Published: 18 Apr 2022, 05:11 PM IST