The Nifty experienced a discouraging week with losses extending into the fourth consecutive week, as reported by Angel One. Starting the week on a tepid note, sellers dominated proceedings for most of the five trading days. The index opened with a notable gap-down mid-week but buyers managed to prevent further downside extension, capping losses for the week. Despite buyers attempting to push prices higher, they failed to sustain at elevated levels, resulting in intraday gains being frittered away and the index settling at 23,897, registering a weekly loss of 1.15%. According to SBI Securities, the technical picture provides little evidence of a sustained recovery, with Nifty comfortably trading below its short and long-term moving averages.
According to Angel One's technical analysis, the technical structure for the frontline index remains wary with a bearish crossover of the 20 DEMA below the 50 DEMA indicating further deterioration. A price breakdown on the weekly timeframe below a key upward-sloping trendline that had acted as strong support since March points towards a potential reversal of the prior uptrend. The emerging technical structure highlights the need to exercise caution and warrants a clear strategy to avoid venturing into aggressive long trades. The 23,750–23,600 band remains an immediate and crucial support zone, with a decisive daily close below this band likely to open the door for further probe towards 23,450–23,400 in the short term. SBI Securities confirms this support zone lies in the 23,750-23,700 region, which is important as the 61.8% Fibonacci retracement of the previous upmove from 23,070 to 24,774 is placed around this region.
On the upside, the 24,000–24,050 band, which acted as an important support zone until recently, has now turned into an immediate resistance area, followed by a stronger hurdle in the 24,150–24,200 band. The P&F X-percent breadth indicator, which was pointing towards overbought breadth, has cooled down considerably since the beginning of August, reading currently at 35%. This cooling indicates an unlikely proposition of an extended down move in the index, though prices remain a leading indicator requiring continued caution. The 24,150-24,200 zone represents the confluence of 50 and 100-day EMA levels, with a sustained move above this range required to ease the prevailing bearish bias and bring stability back to the index.
Despite market caution, Angel One has identified two bullish stock opportunities. Acme Solar is recommended for purchase around ₹419-415 with a stop loss at ₹383 and target of ₹480-500, as the stock remains in structural uptrend with consolidation breakout signaling uptrend resumption. Wockhardt is recommended for purchase around ₹2088-2080 with stop loss at ₹1769 and target of ₹2300-2350, benefiting from price volume breakout and strong demand signals near the 1850 mark.
