After falling sharply, Indian stocks showed some recovery amid state elections in Maharashtra in Tuesday’s trade, however, despite the sharp fall the bluechip Nifty50 index remained below the key 200-day moving average (DMA) of 23,574. This is as the index on November 19 closed below the aforementioned level at 23,518.5, up by 0.28 percent or 64.7.
Technically, traders use the 200-DMA level to know the direction of a particular index or stock. And if it happens, the index or stock trades below this long-term average the instrument is in a downtrend, while those trading above the 200-DMA are in an uptrend.
The index from a September 27 high of 26,277.35 is down 11 percent from current levels.
And amid the steep fall from the high, various factors including continued FII selling, recent dollar strength and yields are at play. This is despite the fact that crude prices are at a comfortable level between $70-$73.5 per barrel. Significantly, lower oil prices result in reduced costs for businesses and can improve their profits.
An overview of the Nifty50
Gaurav Garg, Research Analyst at Lemonn Markets Desk said, “
In the benchmark Nifty 50, despite rallying, the market gave up gains and finally closed below the key 200dma at 23574 indicating further weakness in the near term with immediate support at 23333 followed by 23213.”
Asit C. Mehta Investment Intermediates Ltd. (A Pantomath Group Company) holds that the indicator in the previous day’s trading on the daily scale has formed a doji candle, which indicates uncertainty. The high of the doji candle is approaching the 23,780 level. Therefore, 23,780-23,800 will act as a key resistance for the indicator. On the other hand, the 50-Weekly simple moving average (WSMA) is placed near 23,300, which will provide temporary support for the indicator. Overall, the short-term trend is down until the index stays below 23,800.
Considering the escalating political tensions between Ukraine and Russia may result in a near-term sell-off.
