Technical View of Nifty -50 Index

Nifty-50, the benchmark index, took everyone by surprise on Friday i.e. Sept 22, 2024 and jumped all walls of worry, leaving all its investors in a state of unrest. This jolt came at a time when it was least expected as a day prior to this carnage, the index showed phenomenal recovery from lower levels, thereby restoring some faith. Bulls seemed to have taken control of the market when a strong fight-back was in the later half on Thursday i.e. Sept 21, 2017, however, the same cannot be said for the day that followed as the bears seemed quite adamant in driving the market in their favour right from the very beginning and continued doing so for the entire day.

Considering the daily chart of Nifty-50, following observations can be made:-

• Nifty formed a solid bearish candle, with almost a flat top (Open=10094.35 & High=10095.05), showing no signs of recovery in the entire day.

• The index broke below the crucial level of 10000, where the channel support had been placed. Nifty had been honouring this channel for the last 10 months, which it had entered in Nov, 2016 and this has been the first breakdown ever-since.

• A severe wind-up of over 22% has been observed in Nifty 9900 Sept Put, thereby opening up the opportunity of the index heading towards the downside.

• The Index has offered a convincing close below EMA-20 with increasing Volume.

Considering the weekly chart of Nifty-50, following observations can be made:-

• A Bearish Engulfing pattern has emerged on the top of an established up-trend, thereby validating its severity.

• The index has offered a close blow the channel support of 10000 even on weekly chart.

From the aforementioned clues, it is quite evident that the tone of Nifty-50 has reversed from being positive to negative. However, all is not lost as the benchmark index witnesses a major support near the levels of 9915-30 owing to a trend-line that has acted as a cushion time and again. In addition to this, EMA-50 is also hovering around these levels and daily Pivot Level will also come into play. The Fibonacci retracement level of 50% retracement adds another layer of safety near the same price region. A breach of these levels will infuse further negativity and may result into further sliding down of the 50 stock composite. Levels of 9875 will play an important role as a floor once the aforementioned support has been breached, followed by 9780-90.

For Nifty-50 to show some positivity, a break above the levels of 10000 with good volume support will be required. Up until the point these levels remain protected on the upside, the sentiment on the index will remain negative with some support which could be witnessed near 9915-30.