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The General Election results proving to be contrary to market expectations kept the Indian stock markets highly volatile . by end of the day, the Nifty 50 and the Nifty Bank indices tumbled to close down by about 6 per cent and 8 per cent, respectively. Nifty has closed at 21,884.50 and Nifty Bank index at 46,928.60. Indeed, at a point the intraday fall in the indices were 9.3 per cent in Nifty and 10.6 per cent in the Nifty Bank index.
Now that the actual results are out, what next for the Indian benchmark indices? Where is the Nifty and Nifty Bank index headed from here? Here is the technical analysis on both these indices.
Nifty 50 (21,884.50)
The level of 21,800 is an important support. Nifty has risen back from the day’s low on Tuesday and has closed just above it. Key resistance will now be at 22,200 and 22,450. Nifty has to rise above 22,450 decisively in order to turn the sentiment positive again. Only then Nifty can bring back the chances of the rise to 23,000 and higher levels.
As long as the Nifty trades below 22,450, the bias will remain negative. Nifty can then break below 21,800 again and fall to 21,000-20,800 in the short-term. In case the sell-off intensifies, then Nifty can break 20,800 and tumble towards 20,200-20,000.
However, from a long-term perspective, the fall to 21,000-20,000 mentioned above can be a very good buying opportunity.
Overall, the price action in the next few days is going to be very important. Whether the Nifty can rise above 22,450 or not will determine the next leg of move.
Nifty Bank (46,928.60)
An important support is around 46,000. This has been already tested and the Nifty Bank index has bounced back well from there. It is now important to see if the index is getting a strong follow-through rise from here or not. Also, a sustained rise above 48,000 might be needed to become convincingly bullish again. Only then a revisit of 50,000 and higher levels is possible.
The index is likely to remain under pressure as long as it trades below 48,000. That will keep the risk alive of it breaking below 46,000. Such a break can drag the index down to 45,500 initially. A further break below 45,500 can take the Nifty Bank index down to 44,500.
Such a fall to 44,500 can be a good buying opportunity from a long-term perspective.
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