Nifty Recovery May Pause Temporarily, Trade Setup Analysis Suggests

The Nifty recovery may pause temporarily as of April 24, 2024, according to market trade setup analysis by Hormaz Fatakia. The Nifty witnessed a positive start on Tuesday but consolidated within a narrow range and ended below 22,400 with marginal gains. The index has retraced the recent correction by 61.8%, which is seen as an immediate hurdle.

The FIIs' derivatives positions remain bearish, and the RSI oscillator on the daily and weekly charts is negative, indicating a lack of confidence for a sustained rally towards new highs. "The 22,400-22,500 range is seen as a hurdle, and the immediate support for the index is placed around 22,200 followed by the 22,030-22,000 zone," Fatakia noted in his analysis.

The India VIX has declined sharply, which is usually not favorable for options buyers, and they should be cautious on taking directional bets. Fatakia advises booking some profits on trading long positions and taking some money off the table.

Why this matters: The potential pause in the Nifty recovery has implications for investors and traders in the Indian stock market. The analysis provides insights into key resistance and support levels, as well as the sentiment of foreign institutional investors, which can influence market trends.

The Bank Nifty index is currently at 48,216, up 0.5% for the day, with a positive advance-decline ratio of 8:3. As long as the Bank Nifty index stays above 48,000, the outlook will be positive, and the index can rise to 48,500-48,600 during the day. However, if the index slips below 48,000, the outlook will turn negative, and it could fall to 47,700.

The Indian stock market saw a slight recovery on Tuesday, with the Nifty closing 0.14% higher at 22,336 and the Sensex rising 0.12% to 73,738. Analysts from Religare Broking expect the market to see a temporary pause in its recovery, with support levels at 22,200 and 21,850, and resistance at 22,600 and 22,900. The upcoming general elections and corporate earnings season will be key factors driving the market trend in the near term.

Key Takeaways

• Nifty recovery may pause, facing resistance at 22,400-22,500 range.
• FIIs' derivatives positions bearish, RSI negative, indicating lack of confidence.
• Immediate Nifty support at 22,200, followed by 22,030-22,000 zone.
• Bank Nifty outlook positive above 48,000, negative below 48,000.
• Upcoming elections and earnings to drive near-term market trend.