Market Update

Nifty Daily Chart

Support levels: 25700 Resistance levels: 26000

Slowly and then suddenly Nifty gave up most gains since BoJ rate hike, closing below 26000 has put market on track to 25800 level.

A bounce to 26000 may used to enter fresh short positions, due to oversold RSI level on hourly scale a bounce is likely. Meanwhile a fall to 25800 in extreme scenario may provide the first intraday swing in last 8 trading sessions and an buy opportunity on dip for 26000 level.

Consolidation structure is clearly visible on Nifty daily chart, however it is early to predict if the market is out of consolidation, however a breach of 25650 may prove a trend deciding factor this week, and marking first 'Lower High-Lower Low in the series and opening downside potential to 25000 level.

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RSI is an indicator that shows strength of trend and is often used to check if stock is oversold or overbought in general, this works as a fantastic contra indicator universally. We have taken yearly RSI to find the underlying tone of the market.

Study suggests that on the long term charts stocks in the Nifty 200 universe are skewed to overbought levels, majority of the overbought stocks in this basket in 2024 and in 2019 corrected by 35%-60%, which warns caution ahead for these stocks, also there are no stocks in oversold category which is generally the case in overvalued bull market.


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