After trading within a narrow range of 22,500–22,800 during a holiday-shortened week, the index fell sharply on Friday, closing around 22,125. As a result, a bearish Marubozu candle formed on the daily chart. All major sectoral indices ended in negative territory, with the advance-decline ratio favouring decliners.
From a technical perspective, the 14-day relative strength index (RSI) has reached the oversold region and is currently positioned around 22. Additionally, the moving average convergence divergence (MACD) indicator is trending negatively below the zero line.
On the weekly chart, the index recorded a 2.94% loss, forming another consecutive bearish candle, accompanied by a negative RSI and MACD.
Additionally, February marked the index’s fifth consecutive monthly decline, with the monthly RSI trending downward and a negative crossover on MACD.
According to O’Neil’s methodology of market direction, on 21 February, we shifted the market status to a Downtrend, as the Nifty breached its recent correction low of 22,725. Looking forward, we will shift the market to a Rally Attempt when the Nifty closes in the green for the first time or closes in the upper half of the day’s range and stays above that low for three straight sessions. From there, we would prefer to see a follow-through day before shifting the market back to a Confirmed Uptrend.
The overall market sentiment is negative. Looking ahead, the index is trading with a negative bias, and immediate support is placed around 22,000–21,800, i.e., around the 100-week moving average (WMA).
How did the Nifty Bank perform?
On 28 February, the Bank Nifty opened with a gap down and remained in negative territory throughout the day. The index formed a bearish candle with a lower-high and lower-low price structure on the daily chart and is approaching its support area. The index opened at 48,437.55, traded within the range of 48,574.50–48,078.70, and closed at 48,344.70.
The 14-day RSI has been moving downward and is currently positioned around 37–38. Meanwhile, the MACD is trading with a negative crossover and remains below its central line, indicating continued weakness in momentum.
On the weekly timeframe chart, the index formed three consecutive bearish candles with a lower-high and lower-low price structure, losing around 1.3% on a weekly basis. The weekly RSI and MACD indicators are trending in a downtrend with a negative bias.
According to O’Neil’s methodology of market direction, we downgraded the market status to an Uptrend Under Pressure on Friday (i.e., 14 February), due to technical weakness and an elevated number of distribution days. We will change the status to a Downtrend if the distribution day count increases or if the Nifty Bank fails to hold above the correction low of 47,898.35. On the flip side, the market status will be changed back to a Confirmed Uptrend if the index retakes 50,641.75 (its recent rally high).
This major sectoral index is trending below all its key moving averages with a negative bias in the broader range of 48,000–50,000. A breakout or breakdown on either side may lead the index in the same direction in the coming days. The immediate strong supports are placed in the range of 48,000, followed by 47,500, i.e., the 100-week moving average (WMA).
Stocks recommended by MarketSmith India:
HDFC Bank Ltd: Current market price ₹1,732.40 | Buy range ₹1,715–1,745 | Profit goal ₹1,870 | Stop loss ₹1,670 | Timeframe 1–2 months
Coal India Ltd: Current market price ₹369.35 | Buy range ₹362–372 | Profit goal ₹430 | Stop loss ₹340 | Timeframe 1–2 months
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
