Technical View - Nov 19, 2020 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Sharp profit booking has emerged in the Nifty from the new all time highs of 12963 on Thursday and the market tumbled by around 166 points. After opening on a negative note, the Nifty displayed a fine upside recovery from the intraday lows in the early part of the session.
A intraday gradual upside move has registered a new all time high of 12963 in the mid part and the market started to weaken from the highs. The downside momentum got intensified in the afternoon to later part of the session and Nifty closed near the low. The market breadth was slightly negative and broad market indices like mid and small cap segments have showed resilience and restricted their losses. This is positive indication.
A small negative candle was formed with upper shadow, which indicates a an emergence of profit booking from the new highs. The upper shadow, that formed after a reasonable period of time on the daily chart could indicate a possibility of further weakness in the near term.
The significant trend line resistance (connected from top to top as per weekly and monthly timeframe chart) of 12800 came into play. After holding above this area for the last few sessions, bulls have eventually gave up their defense and closed lower. Now this long term trend line could be considered as a false upside breakout and could open some more downward correction.
Conclusion: The bear's seems to have entered in the market and the Nifty showed reversal from the new highs. Though, the quantum of decline is not alarming any significant change in trend of recent uptrend of the market, but one may expect some more downward correction in the short term. The next crucial lower supports to be watched around 12650-12600. A sustainable move above 13K mark could only open the upside targets of around 13500-13600 levels.