Nifty 50 200 DMA broken, what next
The Nifty 50 index closed below the crucial 200-day Exponential Moving Average (DEMA) on Monday, leading to a mixed outlook for the market based on technical indicators. The Relative Strength Index (RSI) currently sits at 40.7, trending downward and indicating bearish momentum. Conversely, the Stochastic RSI displayed a bullish crossover, suggesting a potential short-term recovery. This disparity in indicators calls for caution as the market lacks a clear directional bias.
Throughout the session, the Nifty encountered significant selling pressure, struggling to maintain levels above the immediate resistance at 24,000. Closing below 23,700 and breaching the 200-day EMA signals a bearish trend. Failure to hold current levels could result in further corrections towards support levels at 23,270 and 23,000. However, a decisive breakout above 24,000 is crucial to reignite bullish momentum, as noted by Mandar Bhojane of Choice Broking.
Open interest (OI) data reveals the highest OI on the call side at 24,000 and 24,200 strike prices, while on the put side, the highest OI is at the 23,600 strike price followed by 23,300.
Analysts provide the following insights for traders:
Jatin Gedia from Mirae Asset Sharekhan observed that the Nifty opened slightly higher but faced selling pressure, closing down 389 points. The index’s inability to hold above the 200-day EMA at 23,700 indicates weakness, suggesting a consolidation within the range of 23,500 – 24,200 in the short term. While the daily momentum indicator shows a positive crossover, the lack of corresponding strength in price action emphasizes the need to trade cautiously.
Satish Chandra Aluri, Lemonn Markets Desk
The markets have reverted to the recent sell-on-rally trend, reflecting cautious investor sentiment as bulls struggle to maintain momentum. A sustainable market recovery will depend on positive Q3 results and growth-supportive measures from the Budget. Technically, Nifty 50 has broken key support levels and may test recent lows around 23,200-23,300 if selling continues. On the upside, Nifty 50 could encounter resistance around 24,000.
Nandish Shah, HDFC Securities
The recent upside breakout of the range has been nullified as Nifty slipped below the crucial 200-day EMA at 23,700 levels for the third time. Consequently, the next support at 23,500-23,400 levels is at risk of being breached. The short-term trend of Nifty is weak, suggesting the possibility of further weakness in the upcoming sessions. Lower supports are anticipated around 23,460 and 23,260 levels. Any upward movement may face resistance around 23,800.
Hrishikesh Yedve, Asit C. Mehta Investment Intermediates
Technically, on the daily chart, Nifty formed a large red candle, indicating significant selling pressure. Consequently, the index has broken the 200-day Simple Moving Average (200-DSMA) of 23,900, leading to an immediate obstacle around 23,900-23,910. On the downside, the index found support near the 250-DSMA around 23,500 levels. A short-term rebound is possible if the index remains above 23,500; however, a drop below this level could intensify weakness.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like NSE India.
Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.