Nifty50 on 25 February
Nifty 50 ended flat on Tuesday after a lackluster trading session. After a muted opening at 22,516.45, the index moved higher toward 22,600 in the initial hour. However, it quickly erased all the gains and traded sideways for the rest of the session, closing almost flat at 22,547.
Consequently, the index formed a Doji candle on the daily chart, indicating a fight between bulls and bears. Barring consumer durables, auto and FMCG, all the major sectoral indices closed lower to flat. The advance-decline ratio was skewed toward decliners, at about 1:2.
From a technical perspective, the index closed below its crucial support zone of 22,700–22,800. The 14-day relative strength index (RSI) is trending downward and is currently positioned around 30. The moving average convergence divergence (MACD) indicator recently witnessed a negative crossover below the zero line.
Also read | Trumped: FIIs abandon Asian equities, unnerved by US tariffs, stronger dollar
Based on O’Neil’s methodology of market direction, we shifted the market status to ‘downtrend’ on Friday, as Nifty breached its recent correction low of 22,725. Looking forward, we will shift the market to ‘rally attempt’ when Nifty closes in the green for the first time or closes in the upper half of the day’s range and stays above that low for three straight sessions. From there, we would prefer to see a follow-through day before shifting the market back to ‘confirmed uptrend’.
The index has breached its crucial support zone of 22,700–22,800. The overall bias of the market remains weak, and immediate support is placed at 22,000–21,800. Any pullback can be considered a selling opportunity on the rise. On the upside, immediate resistance is placed around 22,800–23,000.
How Nifty Bank performed
On Tuesday, Nifty Bank opened on a muted note but later turned volatile and finally closed in the negative. The index formed four consecutive bearish candles on the daily chart, indicating that selling pressure remained persistent. The index opened at 48,691.20, traded in the range of 48,682.15–48,534.15, and closed at 48,608.35.
The 14-day RSI has been trending downward for the past few weeks and is currently positioned around 39–40. The MACD is trading with a negative crossover and is trending below its central line.
Also read: CIE Automotive banks on India as Europe business falters
Based on O’Neil’s methodology of market direction, we downgraded the market status to ‘uptrend under pressure’ on Friday (14 February) due to technical weakness and an elevated number of distribution days. We will change the status to ‘downtrend’ if the distribution day count increases or if Nifty Bank fails to hold above the correction low of 47,898.35. On the flip side, the market status will be changed back to ‘confirmed uptrend’ if the index retakes 50,641.75, its recent rally high.
This major sectoral index is trending below all its key moving averages with a negative bias in the broader range of 48,000–50,000. A breakout or breakdown on either side may lead the index toward the same direction in the coming days. The immediate strong supports are placed in the range of 48,000–47,700.
Stocks recommended by MarketSmith India
Chambal Fertilisers and Chemicals Ltd
Current market price ₹564.20 | Buy range ₹550–565 | Profit goal ₹670 | Stop loss ₹512 | Timeframe 3–4 months
Sarda Energy & Minerals Ltd
Current market price ₹475.35 | Buy range ₹466–485 | Profit goal ₹590 | Stop loss ₹438 | Timeframe 3–4 months
Also read: As price advantage peters out for Nalco, can new capacity bring comfort?
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
