Tech View: Nifty momentum indicators blink sell. Here’s how to trade on Budget day

Nifty ended Monday's trading session 22 points lower near the 20,500-level as traders adopted a cautious approach ahead of the presentation of the Union Budget on Tuesday.

The daily and hourly momentum indicator has a negative crossover which is a sell signal. Crucial support levels to be kept handy are 24,265 (20-day moving average) and 24,000 (23.6% Fibonacci retracement level. On the upside, a breakout above 24,860 can lead to a rise towards 25,530, said Jatin Gedia of Sharekhan.

Given the Budget announcement, volatility is expected to be high in Tuesday’s session.


Open Interest (OI) data indicated that the highest OI on the call side was observed at 24,800 and 25,000 strike prices, while on the put side, it was at 24,000 strike price.

What should traders do? Here’s what analysts said:

Rajesh Bhosale, Equity Technical Analyst, Angel One

The price structure appears weak with the formation of Bearish Engulfing and Shooting Star patterns last week. Additionally, the bearish crossover of RSI Smoothened in the overbought zone does not bode well for the bulls.

Therefore, we remain cautious on Budget Day and would refrain from aggressive long bets. This rationale holds as long as Friday’s high of 24850 remains intact. On the event day, Nifty is likely to experience wild swings, with 24850 as a stiff hurdle followed by 25,000. On the downside, 24,200 followed by 24,000 serves as key support levels. Any significant close below these levels may trigger a much-awaited price correction in the near term.

Generally, budget sessions are pivotal for the next leg of the trend, so traders should monitor the event's outcome closely in relation to key levels at closing.

Tejas Shah, Technical Research, JM Financial & BlinkX

Nifty is bouncing back from an immediate support level of 24,500 and is also holding above the same on a closing basis. The price action has sustained well above the moving averages in the last few days, which is an indication of steadiness.

Supports for the Nifty are now seen at 24,500 / 24,350 and 24,200 levels. On the higher side, immediate resistance for Nifty is at 24,600-650 levels and the next resistance zone is at 24,800-850 levels. Overall, Nifty is likely to remain volatile within the 24,200–24,800 range in the near term.

Rupak De, LKP Securities

A small-bodied candle has formed on the daily chart following a bearish engulfing pattern, suggesting a pause before the next movement. The Relative Strength Index (14) has entered a bearish crossover and is exiting the overbought zone.

The 24,550 level is likely to act as an immediate hurdle for Nifty. A move above 24550 might induce a meaningful rally in the Nifty, while support is placed at 24480. A decisive fall below 24480 might induce selling pressure in the market.

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