Nifty Outlook - 20 September 2022

Nifty started trading for the week on a flat note and witnessed some selling pressure to sneak below 17450 in the initial few minutes post opening. However, the index recovered from the lows and pulled back higher above 17600 and then traded within a range for most part of the day to end above 17600 with gains of half a percent.

Nifty Today:

During last week, the Nifty had breached important ‘20-DEMA’ support and has also given a breakdown from a rising wedge pattern on the daily chart. The momentum readings have also given a negative crossover on the daily chart which has turned the short term trend negative. However, the index corrected from the high of 18096 on Thursday to 17430 on Monday morning which pushed the momentum readings on the lower time frame chart in the oversold zone. Monday's upmove just seems to be a pullback move which would retrace the corrective leg. And once the retracement move is done and the readings on the lower time frame charts cool-off, then we expect the markets to resume the downmove. Hence traders are advised to look to lighten up longs in the pullback move and avoid aggressive longs. The retracement resistances are seen around 17684 and 17762 while 17470 and 17330 are the immediate supports for Nifty. The Bank Nifty index so far has relatively outperformed the Nifty index where reversal is yet to be seen. The support for Bank Nifty index is placed around 40400 below which, this index too would then enter a price-wise corrective phase.

Defensive space witnessed some buying interest as short term trend turns negative

Amongst sectoral indices, the defensive sectors such as FMCG and selective pharma stocks witnessed some buying interest. Going ahead, if the broader markets witness price-wise correction, then the defensive names could show relative outperformance and hence, positional traders should look to shift from high beta counters to stocks from the defensive sectors.

Nifty & Bank Nifty Levels: