Nifty50 Index: Tech View: Nifty50 breaks below 50-DMA; It is officially a ‘sell on rise’ market, caution experts – Blue Barrows

The global rout in equities pushed benchmark indices below crucial support levels. Indian markets closed in the red for the fourth consecutive day in a row, weighed down by a rise in US Dollar as a result of monetary tightening and the possibility of a global recession.

The Nifty50 broke below its crucial short-term support at 50-DMA, placed at 17,340 on Monday. It bounced back from its long-term support placed at 200-DMA at 16,993.

The index finally closed 311 points lower at 17,016, while the S&P BSE Sensex plunged by 953 points to close at 57,145. It formed a bearish candle on the daily charts.

“The bearish bias in the market was present for a few days and had picked up momentum post the US Fed decision. The recession fears in the US and European countries, the Russia-Ukraine war, and the political uncertainty in China have further increased and cast a cloud of uncertainty in the global economy,” Sandeep Bhardwaj, CEO,

, said.

“It is a sell-on-rise market for the medium term, but this would provide an opportunity to accumulate quality stocks for the long term. We would emphasize large caps over mid-caps and being overweight on banks,” suggests Bhardwaj.

The Nifty50 index plunged by more than 1 per cent for the second consecutive day in a row, and it looks like the index officially entered a ‘sell on rise’ zone.

Crucial support for the index is at 200-DMA around 17,000, then at 16,800, while 17,200-17,500 will likely act as a hurdle, suggest experts. A pullback could be on the cards as the index is trading close to oversold levels.

The Nifty has been in a short-term correction mode for the last couple of weeks. The index has been making lower highs and lower lows on daily charts and the SuperTrend indicator also triggered a sell on the daily charts.

“On the way down, Nifty50 breached the August swing low of 17,166. The selling pressure was absorbed near the 200-DMA. The index also has support from a gap area of 16,947-17,018, formed in July on the daily chart,” Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by

, said.

“The index attempted an intraday bounce thereon, however, couldn’t have a sustainable recovery. On the higher side, 17,200 is acting as a near-term hurdle. On the flip side, if the Nifty breaches the gap area, it can continue to slide till 16800,” he said.

FIIs have short positions:
Foreign institutional investors (FIIs) who have pulled out over Rs 5,000 crore from the cash segment of the Indian equity markets created short positions, suggest experts. They have turned net sellers so far for September.

Nifty fell more than a per cent for the second consecutive day as the Dollar Index continued its upmove and the INR depreciated further and surpassed 81.50.

“The rise in the Dollar Index since last week and a sharp depreciation in INR have been the prime reasons for the sharp fall in Nifty,” Ruchit Jain, Lead Research,, said.

“FII’s have formed more short positions in the index futures segment and have been selling in the cash segment too. It continues to be a ‘Sell on Rise’ market, and thus, traders should be cautious on pullback moves. The immediate resistances for Nifty are around 17200 and 17300,” he said.

The short-term trend continues to be negative. “We continue with our advice for traders to stay cautious from a short-term perspective. The immediate support for Nifty is around 16,880 (200DEMA) and 16,765 (161.8% retracement of the previous correction),” recommends Jain.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)