Ruchit Jain, Equity Technical Analyst, Angel Broking
Post the sharp selloff seen on the Budget day, the index started trading for the week marginally lower. However, the index managed to find some support near 11600 mark and showed some pullback during the day to end tad above 11700.
In just a matter of two weeks, the Nifty has corrected sharply from 12400 to almost test the 11600 mark and it tested the '200 SMA' after mid-October 2019. Around this support, there are other indicators such as 161% reciprocal retracement of the rise from 11929.60 to 12430.50 and the 50% retracement of the entire up move from 10670.25 to 12430.50 which coincides in the range of 11580-11660.
Although the market breadth was even-steven today, many of the recent outperformers from the broader markets witnessed buying momentum with good volumes which was a positive sign. Since, the major event is behind us, all eyes would now again be on the global markets movement and the upcoming RBI monetary policy. Technically, since we have already corrected sharply and are now in the vicinity of the support zone, a pullback move could be seen and hence, traders are advised to avoid taking a contra call here.
Infact, stocks which are trading near their 52-week highs and are witnessing good volumes could still provide decent returns in the near term and thus, traders should look to capitalize on such opportunities. The immediate support for Nifty is placed in the above mentioned range of 11580-11660, whereas resistances are seen around 11800 and 11930.
(Share Manthan, February 03, 2020)