Nifty Outlook 1 Mar 2023

It was another day where we witnessed a red candle on the Nifty daily charts as the index continued its correction and ended around 17300 with a loss of about half a percent. However, the banking index and the midcap stocks showed some divergence as relative strength was seen in that space.

Nifty Today:

The short term momentum has been negative since last few days as we can observe nine continuous days of red candles on the Nifty daily chart. The index has corrected from the high of 18134 to sub-17300 level without any pullback move. Now due to this, the momentum readings on the lower time frame chart have entered the oversold territory. Also, if we look at other indices, the BankNifty index has been showing a positive divergence as the swing low in the Nifty index is broken but not in Bank Nifty which is exhibiting some relative strength since last 3 days. The Nifty Midcap100 index too is trading around its support as it breached its important support of 29850, but it was just for a day and the index is back above the same. These divergences when Nifty is oversold indicate that we could see a pullback move soon the markets and hence, the risk reward does not seem to be favorable to take a bearish view here. Along with the above technical structure, a couple of other data where one should keep eye on are the Dollar index and the USDINR movement, and the bond yields which have rallied in last few days resulting in selling in equity markets. FII’s too have short positions in the index futures segment which are short heavy and any covering by them would be the trigger for any reversal in the market.  

Nifty continues correction, while BankNifty and Midcaps shows some divergence

As far as levels are concerned, the support for Nifty is seen in the broad range of 17100-17300 where the index should form a support base while a breakout 17450 could be the confirmation of the trend reversal. 

Nifty & Bank Nifty Levels:

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