Market Outlook for 20 March 2024

Nifty started the day on a negative note and breached the important support of 21900. This resulted in a gradual correction throughout the day and amidst negative market breadth, the index ended the day just above 21800 with a loss of over a percent.

Nifty Today:

During last week, Nifty gave a breakdown from a ‘Rising Wedge’ pattern which is usually seen as a trend reversal pattern. It then consolidated around its 40 DEMA for the last three trading sessions and it breached that important support in today’ sessions. This confirmed a short term corrective phase for the index as well and post the sharp correction in the midcaps and the small caps during last week, it now seems to be the corrective phase for large caps as well. If we look at the derivatives data, the FIIs have been on the short side throughout the series with more than 60 percent of the positions now on the short side.

Also, in the options segment, the put writers were seen covering their positions and call writers added fresh positions which is a negative sign. The RSI oscillator too continues to hint at a weak momentum and hence, we continue with our cautious approach for the near term. The immediate support for Nifty is placed around 21670, but major support seems only around 21500-21450 zone which could be tested soon. Hence, until any reversal signs are seen, one should be cautious for the near term. On the higher side, 21900-21950 would now be seen as the immediate resistance on pullback moves.

                                   Nifty breaks important support, selling seen in defensive sectors

Sectors such as IT, Pharma and FMCG which are usually seen as defensive in nature witnessed a sharp sell-off and witnessed underperformance. The price action does not seem to be bullish here and hence, we could see further weakness in the sectors.

Nifty, Bank Nifty Levels and  FINNIFTY Levels: