Charts indicate temporary pause for D-Street bulls; support at 24,000 mark

The truncated yet eventful week started off with a flurry of activity but ended on a more subdued note. The benchmark index showed limited movement and stayed within a narrow range before the mid-week holiday sessions.

However, in the later part of the week, there were significant and volatile fluctuations in the market. The Nifty continued its winning streak for the seventh consecutive week, closing above 24500 with a weekly gain of 0.12 per cent.

Despite the benchmarks consistent winning streak, the broader market exhibited significant divergence, particularly in the last two sessions. During this period, the Advance-Decline ratio notably favoured bears, highlighting the prevalence of declining stocks.

 

From a technical perspective, it is worth noting that Nifty has formed a ‘Shooting Star’ on a weekly time and a ‘Bearish Engulfing’ on a daily time frame at record highs. This could potentially signal a shift in the trend or a temporary pause in the current upward momentum for the Bulls of the D-Street.

Also, as we approach the upcoming Budget week, it is important to note that the volatility index may experience an uptick. This is due to India VIX teetering on the edge of a consolidation breakout on the daily time frame leading up to the Budget week.

As far as levels are concerned, a sustainable plunge below 24,500 is likely to provide some more respite to the benchmark for a potential downside to 24,300-24,200 (20 DEMA) on an intermediate basis, while the sacrosanct support lies at 24000 mark.

The trading range is highly anticipated to broaden amidst the Budget week, and hence, proper risk management is warranted for the participants.

Furthermore, while looking at the elevated parameters and rising volatility caution is recommended. On the contrary, the record high of 24,800-24,850, now could be seen as a daunting task for the Bulls in the comparable period.

(Disclaimer: Osho Krishan is a senior technical & derivatives analyst at Angel One Ltd, views expressed are his own)