NIFTY BEARISH OR BULLISH ? READ OUTLOOK FOR 13/04/2022

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Concerns over a slowdown in consumer spending following a rise in fuel prices ahead of the earnings season hit investor sentiment today. Hyperinflation and the risk of interest rate hikes are rattling the global market and hurting the performance of rising yielding stocks. Inflation in India is also expected to be on the higher side in the first quarter of FY23, expected to ease on a reversal in commodity prices and improving supply. The domestic market is also cautious in anticipation of the Q4 results. Nifty, posting the open to the downside, broke 17600, the key support level. Indian benchmark indices ended April 12 for the second consecutive month lower in volatile trading. At the close, the Sensex was down 388 points to 58576 and the Nifty was down 144 points to 17530.

Technically, the Nifty has closed below the 10-day SMA after a long time. We think the broader market structure is still weak and renewed uptrend rally is only possible after breaks above 17650. Below these levels we could see further weakness to 17600-17500. The Nifty broke off an inside bar pattern formed on the daily chart on April 11th. However, the selling pressure was absorbed near the 20-day moving average, prompting the bulls to act. Consequently, the index managed to hold the 17500 level on a closing basis. The overall structure suggests that the index has reached the bottom of near-term consolidation with the recent minor dip. 17500-17400 is a crucial support zone from where the index can make a bounce up towards 18000. Therefore, from a short-term trading perspective, the risk reward at this level is quite attractive to open a new long position. On the other hand, if Nifty manages to trade 17650, it will rally to 17700 and 17800. The market structure is volatile therefore level based trading would be the ideal strategy for the traders. The Bank Nifty Bulls came back strong in the second half, outperforming the Nifty Index. The index is near the 38000 resistance zone and it needs to decisively break above this level for the bulls to take full control. The 37400-37300 lower zone acts as a bid area and a close below will trigger new selling pressure.

Resistance: 17600, 17700, 17800

Support: 17500, 17400, 17300