Further, selling intensified in the second half of the session owing to the F&O expiry taking the index below its previous pivot low of 16,400 forming a lower low confirming an intermediate downtrend.
Next immediate support is at 16,200; below which Index may test levels of 15,950-15,550. Moreover, the index has also closed below its 200-DMA at 16,890 which also happened to be the cluster of recent lows confirming this weakness. However, if bulls manage to maintain the Nifty50 index above this key support of 16,200 a short covering rally may play out taking the Index higher to levels of 16,400-16,700.
Technical indicator, RSI is now at 30 level and sitting in bear territory. Market participants should also closely monitor the VIX which is approaching the key reversal zone of 36-40, usually it has been observed that markets tend to bottom out when VIX reaches 40.
Recommendations:
BAJAJ AUTO
Sell@CMP Rs 3,479
Target: Rs 3,300
Stop Loss: Rs 3,570
Stock has broken down from a channel pattern triggering bearishness. Technical Indicators are also suggesting a sustained downtrend.
RBL BANK
Sell@CMP Rs 122
Target: Rs 110
Stop Loss: Rs 130
Stock has broken down from a bearish flag pattern suggesting weakness. Further, RSI is also suggesting lower levels in the coming sessions.
(The author, Aditya Agarwala, CMT, is Technical Analyst–Research at YES Securities)
