Nifty weakness could extend down to 11,800 level

By Nagaraj Shetti, Technical Research Analyst, HDFC Securities

Where are we: Mild down trend amidst range bound moves continued in the Nifty for the second con-secutive session on Friday when it closed lower. We observe a broader range movement in the Nifty over the last one month in the 12035-11825 band. Presently, Nifty shows a downward correction from near the upper end of the range. The uptrend of the last couple of months is still intact and we observe a formation of higher highs and higher lows as per weekly timeframe chart.

What is in store: The upper area of 12000-12050 has been acting as a strong overhead resistance for the Nifty and the market shows a choppy trend below the hurdle. We observe a formation of high wave type candle pattern in the last three weeks, as per weekly timeframe chart. Formation of such pattern below the key overhead resistance could be a relief factor for bulls to make a comeback from the lows. Lack of sharp selling participation below the resistance could eventually result in an upside breakout attempt.


What traders can do: The underlying trend of Nifty is weak within range bound action. Present weakness could extend down to 11800 levels in this week and we expect a possibility of buying emerging from near 11800-1750 levels. The expected upside bounce from the lows could challenge the upside resistance of 12000 mark again in the next few weeks. Only a sustainable move above 12100 levels could pull Nifty up to 12300-400 levels in a quick period of time. A sustained move below 11800 could reverse the current uptrend. One may look to buy Jindal Steel at CMP, add more on dips down to ₹138, wait for the upside target of ₹160 in the next 3-4 weeks. Place a stoploss of ₹133, as per closing basis.