Nifty’s slide to continue; 15,000 possible this week

Synopsis

While some see a rebound in the market, it would be hard to sustain the highs. Some even see the Index falling to 14,800 levels. A fall below 14,880 would mean that the Nifty has entered a bear phase as it would mean that the index has fallen 20% from its record high hit in October 2021. Analysts said bounce backs are possible but it will not be a trend reversal.

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Nifty last week finally breached the key 15,650-15,750 range that was acting as strong support clusters all this while.

Technical analysts see the Nifty testing 15,000 level or lower after falling 5.6% last week. Nifty closed at 15,293.50 on Friday and underperformed most regional peers during the week.

While some see a rebound in the market, it would be hard to sustain the highs. Some even see the Index falling to 14,800 levels. A fall below 14,880 would mean that the Nifty has entered a bear phase as it would mean that the index has fallen 20% from its record high hit in October 2021. Analysts said bounce backs are possible but it will not be a trend reversal.

AJIT MISHRA

VP-TECHNICALS,

BROKING


Where is the Nifty headed?


Nifty has finally breached the crucial support zone at 15,670 levels, i.e. March 2022, low and now inching towards the lower band of the declining broadening formation which currently exists around 14,800 levels. It’s important to note any levels below 14,880 would also mark the entry into the bear phase i.e. 20% decline from its record high of 18,604.45 levels. Amid all negativity, we may see some intermediate respite as well due to the oversold US markets but the 15,550-15,700 zone would act as a strong hurdle.

What should investors do?


Investors should continue with the “sell on rise” approach until the trend reverses. Any rebound towards the resistance zone of 15,550-15,700 would offer the opportunity to create shorts. However, due to excessive overnight volatility, it’s prudent to trade through options strategies like Bear Put Spread instead of naked shorts in futures. Among the sectors, the energy pack looks more vulnerable to a fresh fall. Besides, we’re closely eyeing the 32,000 mark in the banking index as a make or break level. On the other hand, the auto pack is still showing comparatively better performance while select stocks from pharma and FMCG may see some respite after the recent decline. Participants should align their positions accordingly. accordingly.


ROHIT SRIVASTAVA

FOUNDER, INDIACHARTS.COM

Where is the Nifty headed?


Nifty has fallen a lot in two weeks bringing it to oversold territory based on the RSI (relative strength index) indicator. The last two times that meant that the market bounced back in a countertrend move before going lower. This time should be no different. This week Nifty may attempt at a move back to 15,800-16,000 in a surprise bounce, but the move is not a trend reversal. Once the bounce is done, the downtrend may resume as higher levels will attract selling pressure. Overall we are looking at Nifty going down to 14,500 in coming weeks.

What should investors do?


With falling prices of oil and gas, the markets may get some relief from the risk of more inflation. What this also means is that the only strong sector i.e. energy oil and gas, will start to underperform. This means there may be very little place to hide for investors in the near term. A short-term bounce in the Nifty is best played with index futures only because rotation between stocks or sectors in a bear market makes it hard to guess which ones will surely go up. On the other hand, during declines, I would expect a more broadbased decline.

SRIRAM VELAYUDHAN

VICE PRESIDENT-ALTERNATIVE RESEARCH, IIFL

Where is the Nifty headed?


Nifty last week finally breached the key 15,650-15,750 range that was acting as strong support clusters all this while. The weekly close below 15,400 has pricked the critical support creating room for further downside till 14,800 levels. Even the market breadth indicators are clearly pointing towards more caution. The Index now faces a strong resistance near to 15,650 and 15,750 levels.

What should investors do?


As momentum oscillators are extremely oversold, there may be instances of sharp bouts of short covering. However, we believe traders should use such opportunities to create short positions in the index. Any rise towards 15,450 levels can be used by traders to create short positions in Nifty futures for a target of 14,800 with stop loss of 15,800. Investors with a medium term horizon can utilise the dips to accumulate stocks like

,

,

and Mahindra & Mahindra.


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