Be cautious! Nifty approaching key resistance zone, say analysts
Stock market outlook: 17,800-17,900 is a key resistance area for Nifty, say analysts
PremiumIt is time to get cautious as Indian stock markets are approaching key resistance levels though the short-term trend remain positive, say analysts. Equities will track global trends, foreign fund flows and movement of crude oil prices in this holiday-shortened week. Stock markets are closed today on account of Independence Day. The demise of ace investor Rakesh Jhunjhunwala on Sunday has come as a shock to the investor community.
Last week, the key benchmark indices Sensex and Nifty registered their fourth straight week of gains, rising nearly 2% on a weekly basis. The NSE Nifty 50 had settled at 17,698 while S&P BSE Sensex at 59,462.
“The Nifty gained ground in all four trading sessions last week ending higher for four weeks in a row. The bulls are benefiting from strong medium-term momentum. However, the hourly RSI has tumbled behind the price and is displaying a bearish deviation which indicates that upward momentum may be going to slow in the short term. Short-term traders must liquidate some positions and wait for dips to enter. Immediate resistance is located around 17,800, while 17,600 serves as a decent support," said Apurva Sheth, Head of Market Perspectives, Samco Securities.
Data released on Friday, post market hours, showed retail inflation in India easing though it remained above RBI's comfort zone. India's industrial production grew in double digits for the second month in a row at 12.3 per cent in June, mainly due to strong performance by manufacturing, power and mining sectors, according to official data released on Friday.
Ajit Mishra, VP - Research, Religare Broking, said: “Participants will first react to the macroeconomic data viz. IIP and CPI in early trade on Tuesday. Going ahead, with earnings season behind us, the performance of global markets will be the focus for cues. Nifty has again reached the critical hurdle of the upper band of the broadening formation, which currently lies around the 17,800 mark and we may see some consolidation. Going ahead, buoyancy in global markets and rotational buying across sectors could help the index to surpass this hurdle and inch towards the 18,100+ zone. In case of any profit-taking, 17,150 and 17,450 levels would act as a support."
According to Santosh Meena, Head of Research at Swastika Investmart Ltd, Jhunjhunwala's death is a big loss for the Indian equity market.
"Always a cheerleader of India, our economy and markets, Rakesh Jhunjhunwala was a true visionary. An unparalleled optimist and a man of discipline in investments, he always came out a winner be it bull market or bear market," C J George, MD & CEO of Geojit Financial Services, said.
Asian shares were mixed today after China's central bank cut a key interest rate and Japan reported its economy picked up momentum in the last quarter.
According to Nagaraj Shetti, Technical Research Analyst, HDFC Securities, Nifty is now gradually advancing towards the significant overhead resistance of down trend line with slower upside momentum (intermediate down trend line connected from the important lower tops) around 17800-17900 levels.
“The significance of this trend line indicates higher possibility of reversal down from the highs. The short term trend of Nifty continues to be positive with range bound action. One may expect continuation of choppy movement for the early this week and Nifty could possibly reach upside of around 17800-17900 levels by next week. Having placed at the hurdle, bulls needs to be cautious and long positions to be protected with proper stop-losses. Immediate support is placed at 17560 levels," he said.
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