Nifty sees profit booking after 8-day rally; 18,900 a key hurdle, say analysts

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On Friday, the Nifty fell below the 18,900 level, registering its first decline in nine sessions. The 50-Pack Index negated its higher high-low and formed a bearish candle on the daily chart. On the weekly scale, the index formed a bullish candle but with a longer wick, suggesting selling at higher levels.

Gaurav Ratnaparkhi of Sharekhan said that Nifty formed a Bullish Outside Bar on the weekly chart in the last week of the week and the index witnessed an uptrend this week.

“After rising for eight consecutive sessions, Nifty witnessed profit-booking on Friday. Nevertheless, it still remained above short-term support. The index was trading close to the rising trendline on key hourly moving averages as well as on the hourly charts. 18,600 is a key support from where the index can start rising again. Overall, the short term outlook remains positive for a target of 19,000,” said Ratnaparkhi.

Apoorva Sheth, Head of Market Perspectives, SAMCO Securities, said the index is showing a higher top-higher-bottom structure on the daily chart, indicating a sustained uptrend. At the beginning of the week, he said, the prices recorded their fresh lifetime highs and continued to move higher afterwards.

“In Friday’s session, Nifty showed first sign of profit booking as prices slipped below 18,900 level, with a bearish candle on the daily chart. The index has completed the Bearish Crab Harmonic pattern at 18,887.60 level. Momentum The oscillator RSI (14) has reached the overbought zone on the daily chart and is currently falling below 70. To gain bullish momentum, bulls need to surpass the 18,900 level as option sellers are waiting for an increase in open interest. Also active near 19,000 level,” Sheth said.

The analyst sees support for the index at 18,500 and feels that any move below this would extend the fall to 18,380 levels.

Rupak Dey, Senior Technical Analyst, LKP Securities said the sentiment is likely to remain sideways with the key range of 18,500-18,800. He added that a decisive breakout from either band could induce a clear directional move in the market.

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