Nifty trend and stocks in action on September 15, 2020

Nifty kicked off the first trading session of the week in style amid renewed optimism about the COVID-19 vaccine and positive global cues.

As the day progressed, it started to gain momentum and went on to touch an intraday high of 11,568.90 but there was a twist in the tail. The bears that were in hibernation mode suddenly got alive and snatched defeat from the jaws of victory as a resistance zone, which we had mentioned in our previous write-up, and remained intact. At one point during the day, Nifty slipped below the 11,400 mark and made a low of 11,383.55.

At the closing bell, Nifty ended off at day’s low but it settled almost 120 points down from the day’s high. The price action formed a bearish engulfing pattern with a high-low spread of 185 points, which is greater than its 10-day average. Further, Nifty negated the formation of higher lows of the last two trading sessions. Going ahead, the zone of 11,370-11,380 is a crucial support level as it’s a confluence of 21-day EMA and 50 per cent retracement of the recent upmove. A decisive close below this would open for a further correction towards the zone of 11,250-11,270.

Also, if one does a simple analysis on the 60-minute chart for the range of the candle, it will give us a hint as to who is in the driving seat. There are many wide range candles on the downside but only a few bullish candles, which clearly suggests that the bulls have no power left and the bears are taking over. Further, Nifty recorded yet another distribution day and with this, the total count of distribution day swelled to 7. This is an abnormal phenomenon. Usually, a distribution day count of 5-6 means the market turned bearish. As Nifty is still above the 20-DMA and 50-DMA, we cannot categorise the current market condition as completely bearish.

On the upside, an immediate resistance stands at 11,510, followed by the major resistance level of 11,565-11,585 and we would reiterate until this level is taken out and the bulls would be on slippery ground.

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