Nifty technical outlook for the week: Support of 10,300 would not be violated in November

Published: November 5, 2018 8:22:46 AM

Nifty outlook: From the bottom of 10,004, registered on 26th Oct 2018, Nifty has risen more than 6% to 10,606 till date.

NSE, Nifty, National Stock ExchangeNifty outlook: Support for Nifty has now shifted upwards to 10300-10325, where 20 DMA is currently placed

Vinay Rajani

From the bottom of 10,004, registered on 26th Oct 2018, Nifty has risen more than 6% to 10,606 till date. Previous top on the Daily charts is placed at 10,710, which can act as a immediate resistance. A 200 DMA is placed at 10,765, which could also act as a hurdle in short-term. The current levels of Nifty are not that far from the above resistance levels and that is why we cannot rule out the possibility of running correction.

However, there has been a development of Positive divergence on Daily RSI Indicator, where Nifty formed new bottom and RSI made a higher bottom in October end. MACD indicator has been also showing strength on the daily charts.

Also read: Share market wrap! Nifty posts biggest weekly gain since 2016; check top stock picks for next week

Support for Nifty has now shifted upwards to 10300-10325, where 20 DMA is currently placed. As far as BankNifty is concerned 25,900 to 26,050 range is stiff resistance, above which Gains could extend up to 27,150 levels. Support for the BankNifty is seen in 25,000-25,200 range.

On the derivative front, Stock future open interest was at 14 months low in the start of the November series, indicated the lower leveraged positions, which augured well for the bullish trend reversal. Our study dating back to the times when Derivatives were initiated in India shows that if the Nifty’s loss in two consecutive series is more than 10%, then the third series has closed higher in 11 out of 12 times in the history. Nifty fell 14% in the September and October series put together.

To conclude, markets seems to have bottomed out for the short-term. There could be a running correction but overall we believe that the support of 10,300 in Nifty would not be violated in the November month.

(The author is Technical Analyst, HDFC securities. Views expressed are the author’s own.)

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