Nifty Technical View: ShareKhan

Nifty closed in green today forming an inside bar on the daily charts. From hereon, here stand two possibilities.  First, there can be an extension in wave five down.  Second, the wave five down is done and the index is ready for a pullback in corrective pattern on the upside, which could be between 23.6-61.8% depending on how the waves unfold. So, there are two levels to watch out for. 4692 and 4827 as breakout on the either side will lead to further confirmation if the wave two up has started or there is an extension in the wave five down. The weekly and daily momentum indicators remain in sell mode so the larger trend is down, whereas the hourly indicator KST has given a positive crossover. So there exists a possibility of a pullback in the short term.

On the daily chart, Nifty is trading below its 20 daily moving average (DMA) and 40 daily exponential moving average (DEMA) placed at 5032 and 5023 respectively, which are resistances in the near term. The momentum indicator (KST) has given negative crossover and is below the zero line. The market breadth was positive with 1,075 advances and 198 declines on the NSE and 1,931 advances and 607 declines on the BSE.  On the hourly chart, Nifty is trading below its 20 hourly moving average (HMA) and 40HMA placed at 4826 and 4844 respectively, which are now the resistances in the short term. The momentum indicator (KST) has given positive crossover and is trading below the zero line.  Nifty and Sensex closed the session 38 points and 124 points up respectively. Of the Sensex stocks, Hindalco Industries (up 2.39%) and TISCO (up 1.50%) topped the 30-scrip chart while Dr Reddy’s Laboratories (down 1.16%) and Hero Honda Motors (down 0.24%) were at the bottom of the chart.