Nifty Outlook - 21 September 2022

Nifty started with a gap up opening and rallied with a broader market participation to surpass 17900 mark. However, the index gave up some of the gains in the last hour of the trade and ended above 17800 with gains of over a percent.

Nifty Today:

Our markets have seen a fair bit of volatility in last few sessions wherein the index had resisted around the 18000-18100 range and had seen a sharp correction to sneak below 17450. But it has recovered much of those losses in last couple of trading sessions. Now if we look at the short term charts, the recent correction in the Nifty has led to a breakdown from a ‘Rising Wedge’ pattern on the daily chart and the momentum readings have given a negative crossover from the overbought zone. This has already turned the short term trend down and because of the oversold set-ups on the lower time frame chart, we have seen a pullback move in the last couple of trading sessions. Hence, the risk continues to remain high and until we do not surpass 18100 level, we are not out of the woods. Traders would be eyeing the FOMC meet which is scheduled Wednesday evening and although the market participants expectations of 75 bps rate hike may have been factored in, the reaction of the global markets to the event would be keenly watched which would have an impact on our markets as well. The chart structure does not depict a rosy picture for the Nifty index as of now and hence we advise traders to stay cautious and lighten up long positions in this pullback until the index breaks the major barrier. The immediate supports for the Nifty are placed around 17580 and 17430 and if these levels are breached, then we expect the Nifty to correct towards 17250 at least in the near term. The bearish view will negate if the index manages to surpass the resistance zone of 18000-18100.

Nifty upmove just seems a pullback, risk remains high ahead of global event

In our yesterday’s outlook, we had mentioned the probability of a buying interest in the defensive sector such as Pharma. We witnessed good momentum in certain stocks within this sector as expected and considering the higher volatility expectations ahead, this sector is likely to see some relative outperformance in the near term.

Nifty & Bank Nifty Levels: