Unfortunately, the one who is a pessimist, would want to tell you that the 33-point fall came after the index fell close to 170-180 points in the early minutes of trade, managed to hold on to this week’s low of 23,070, went all the way up to 23,300 after that, but could not sustain at those levels, yet again.
The absolute lack of conviction at higher levels is not something that the bulls will be happy with. This week has had no directional move whatsoever for the index. Everytime there appears to be a directional trend emerging, supply or support emerges at those levels and the index finds itself back in the range it has been in all through June so far.
After making a higher high and a higher low on Wednesday, the Nifty failed to repeat that during Thursday’s session, failing to retest the previous day’s high and also broke below the mid-week session low.
While the Nifty continues to struggle, it has been a forgettable week for the broader markets as well. Barring the Tuesday bounce, both the Nifty Midcap and Nifty Smallcap indices have underperformed the benchmark index through the week. For the week so far, the both the broader market indices are down over 2% each.
Why Is The Nifty Not Reacting To Positive News?
With most domestic triggers now out of the way, the market lacks any significant directional cue, more so because it has not reacted to crude prices falling below the $90 mark, albeit briefly, either. The uncertainties of the war persist, but the bulls also fear a weaker-than-anticipated monsoon, and its subsequent impact on the economic activity in the future.
The other major painpoint comes from IT. The index has just been on a selling spree ever since the first two days of June, during which it had seen a sharp rebound from lower levels. The Nifty IT fell for the seventh day running on Friday and has declined over 10% during this period.
For the week so far, the Nifty IT index is the joint-worst performing index along with the Nifty Energy, both of which are down over 4%.
What Are The Key Levels For The Nifty?
With the Nifty having failed to sustain at higher levels, it still finds itself in that 23,100 to 23,400 – 23,500 zone. The optimistic bull would hope that a retest of Monday’s low means a double bottom has been put in place, which generally results in a rebound in the index.
However, while the 23,100 – 23,050 zone continues to attract buying interest, till the time the index heavyweights do not step up, the Nifty will always struggle to cross the 23,400 – 23,500 zone on the upside. There is only so much heavylifting that ICICI Bank can single-handedly do.
Is The Nifty A Buy Or A Sell?
Nandish Shah of HDFC Securities also observed the formation of a double bottom pattern on the Nifty’s daily chart, thereby underlining the significance of the 23,070 level on the downside. However, for any meaningful upside, he wants the Nifty to close above the recent swing high of 23,425. Any further weakness below 23,070 could open the doors to levels of 22,800 – 22,700 on the downside.
“A decisive break below the 23,000 mark could trigger the next leg of the corrective phase, while the upside is likely to remain capped near the 23,500 level. At the same time, profit booking in the broader indices, which had been outperforming earlier, is adding to participants’ concerns,” Ajit Mishra of Religare Broking said.
For day traders, the 23,300 zone will act as an immediate resistance, according to Shrikant Chouhan of Kotak Securities and only crossing these levels could open doors to the Nifty bouncing back towards the 24,450 – 24,500 zone. However, a sustained move below 23,100 could accelerate the selling pressure towards 22,900 levels.
