The short-term trend for the Nifty remains bearish until the resistance of 11500 is crossed decisively. We could see a short-covering bounce on the advent of positive news, but it will be sold into by the traders.
The Nifty50 has fallen for the ninth day on the trot on Monday. It fell by 130 points on Monday to close at a two-month low at 11,148 levels. From the all-time high of 11,856, Nifty has witnessed a fall of more than 700 points.
The Nifty50 has been trading below its 5 and 20-day simple moving average (SMA) indicating a short-term trend turned bearish. The momentum indicators and oscillators have been showing a negative setup on the charts since the last one and half month.
Underperformance for the Nifty Midcap-100 and Smallcap Index 100 continued where it fell by 2.2 percent and 2.70 percent respectively. The Nifty Midcap Index has been falling for a 6th straight week, resulting into a total fall of 10 percent while Nifty small cap Index is down 11 percent from the April high.
Declining stocks outnumbered advancers for the last eleven trading sessions for the first time since June 2018. The earlier support of 11500 is now expected to act as a resistance for Nifty.
Unless Nifty closes above 11500, the trend would be considered bearish for the markets. The 200-DMA for the Nifty is currently placed at 11,033 which is expected to act as immediate support.
To conclude, the short-term trend for the Nifty remains bearish until the resistance of 11500 is crossed decisively. We could see a short-covering bounce on the advent of positive news, but it will be sold into by the traders.
On the downside, support is seen around 11000 levels where we have seen Put writing. The level also coincides with the support of 200 day SMA which is placed at 110300 levels.
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