Nifty Today Outlook Report - 21 July 2022

The positive global cues and the news on windfall tax cut led to a gap up opening for Nifty well above 16500 mark. The index then consolidated in a range for most part of the session and ended above 16500 with gains of over a percent.

Nifty Today:

The index continues its ‘Higher Top Higher Bottom’ structure and hence the short term trend still remains up. However, the index has now reached its crucial resistance zone of 16550-16650 where the 200-day EMA along with the 50% retracement of the correction from 18100 to 15200 is seen. The momentum reading on the daily chart is still positive but it has reached the overbought zone on the hourly charts. Generally such overbought set-ups lead to minor in-between corrections and since the index is also near the above mentioned resistance zone, a pullback move cannot be ruled out to relieve the overbought set-ups. In case of any dip, the immediate support will be seen around the hourly 20-EMA which is around 16380. For now, traders can look to book profits around the resistance zone of 16550-16650 and reassess again on dip around 16380-16300.

                                             Banking leads to keep the market momentum intact

Amongst sectoral indices, most of the sectors witnessed a positive momentum but the IT space was clearly the show stopper where we witnessed buying interest after a long time. The Nifty IT index has given a breakout from its resistance which means that this sector could see further pullback move in the near term and lead the momentum.