Tech View: Bloodbath on D-St! Should traders go short on Monday?

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The US Fed jitters kept equity and currency markets on edge. The S&P BSE Sensex plunged more than 1,000 points while the Nifty50 broke below a crucial support at 17,400 and also briefly slipped below 50-DMA but then bounced back.

The short-term moving average for the Nifty50 is at 17,315. The index bounced back after taking support around 50-DMA to finally close 302 points lower at 17,327. It hit an intraday low of 17,291.

The Nifty50 formed a long bearish candle on the daily charts. The Supertrend indicator also triggered a sell on Friday.

A rise in US bond yields and selling by foreign institutional investors, weighed on sentiment. FIIs were net sellers for more than Rs 2,500 crore in the cash segment of the Indian equity markets on Thursday.

“A rise in the US 10-year bond yield and a strong dollar index influenced FIIs to flee emerging markets. A fall in liquidity in the banking system, a weak currency and a current premium valuation set the market outlook bearish for the near term,” Vinod Nair, Head of Research at

, said.

Time to go short?
The Nifty has turned negative on a year-to-date (YTD) basis, and as long as it trades below 17,700 levels – the outlook is likely to remain negative in the short term.

Traders can go short on the index for a possible target towards 17,100 levels in the coming week, also the expiry week, suggest experts.

“Markets are finally witnessing pressure after showing resilience for quite some time, and indications are pointing towards further decline. The Nifty index has the next crucial support at the 17,100 zones,” Ajit Mishra, VP – Research,

Broking, said.

“Since most sectors are trading in tandem with the benchmark, it’s prudent to maintain short positions also. On the other hand, investors should utilise this phase to accumulate quality stocks in a staggered manner,” he added.

On the technical front, the Nifty has been trading with Lower Highs and Lower Low formations for the last four trading sessions. A close below Friday’s support of 17,291 will increase selling pressure in the coming week, which is likely to be volatile.

“Options data suggests a broader trading range in between 17,200 to 18,200 zones, while an immediate range in between 17,500 to 18,000 zones,” Chandan

, Vice President, Analyst-Derivatives at , said.

India VIX was down by 2.61% from 19.32 to 18.81 levels. On the options front, the maximum Call OI is placed at 18,000 and then 18,500 strikes, while the maximum Put OI is at 17,500, then 17,000 strikes.

“The Nifty formed a bearish candle on a daily chart and is trading below 21-DMA, which adds bearishness to the prices. Nifty has given a breakdown of the horizontal line and given closing below the same, which adds bearishness to the prices,” Palak Kothari, Senior Technical Analyst at Choice Broking, said.

“The support for Nifty has shifted around 17,150 levels while on the upside 17,700 may act as an immediate hurdle. On the other hand, Bank Nifty has support at 39,000 levels, while resistance at 40,800 levels,” added Kothari.

“Overall, the Nifty is looking weak on charts that can test the 17,150 level in the upcoming week while closing above 17700 can show an upside rally. Selling on rising is advisable for the upcoming session,” she recommends.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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