Pre- Market Commentary: Nifty: sustained move above 23,100 could signal a pause in the ongoing correction

MUMBAI, 30 SEPTEMBER: Nifty formed a high wave candle with a long lower shadow which maintained lower high and a lower low signaling continuation of the downward bias. The index opened on a weak note and slipped below 22,600 in the early trade before rebounding in the second half of the session to close marginally above the 22,700 levels.

Immediate bias in the index remained down and a follow through weakness will signal extension of decline towards the key support area of 22,400 being the confluence of the trendline support joining the major lows of the past two years and the 200-week EMA.

A move above 22,800 will signal a pullback towards the 23,000 levels. However, for a meaningful trend reversal index would require forming a sustained Higher High–Higher Low structure and reclaim the 23,000-23,100 level. A sustained move above 23,100 could signal a pause in the ongoing correction.

The daily stochastic has approached oversold territory with a reading of 13, hence a pullback from lower levels after the recent sharp decline cannot be ruled out.

Bank Nifty: move above 54,500 will signal a pullback towards the 55,200

Nifty formed a doji candle with a long lower shadow which maintained lower high and a lower low signaling continuation of the downward bias. The index opened on a weak note and slipped below 54,000 in the early trade before rebounding in the second half of the session to close marginally above the 54,200 levels.

Immediate bias in the index remained down and a follow through weakness will signal extension of decline towards the key support area of 53,500-53,000 being the confluence of the previous major lows and measuring implication of the recent range breakdown (58,500-56,000).

A move above 54,500 will signal a pullback towards the 55,200 levels. However, for a meaningful trend reversal index would require forming a sustained Higher High–Higher Low structure and reclaim the 55,000-55,200 level. A sustained move above 55,200 could signal a pause in the ongoing correction.

Report by: Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking

(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing)

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