Nifty trend for Friday

On the eve of weekly expiry, Nifty snapped its seven-session winning streak as the market participants preferred to take profits off the table after a breath-taking rally in the index. Nifty began the day with a gap down and soon, it slipped lower and filled Wednesday’s session opening gap. On the downside, Nifty took support around the 5-Day EMA and in the process, recovered almost 80 points from the day’s low.

This smart recovery from the lower levels, aided by the strong performance of Nifty FMCG index and short-covering, lend a hand to the indices to close where it had opened and with this, the index formed a Doji-like candlestick pattern. However, the broader markets relatively underperformed Nifty as both Nifty Mid-cap and Small-cap lost 0.83 per cent and 0.53 per cent, respectively. As a result, the advance-decline ratio was in the favour of the decliners.

Technically, Nifty has breached its sequence of higher high & higher low for the first time from the swing low of 12,790. Though the bears had pushed the price below the low of the prior bar on an intraday basis, it lacked the power to keep bulls off the game as they failed to close below the previous day's low. Also, the closing is seen around the upper quartile of the day, which reaffirms that the bulls have just taken a pause and it’s routine profit-taking in the markets. Also, the fear gauge, India VIX dropped 1 per cent, which indicates that there is no panic in the market.

Going forward, the level of 13,370-13,400 is a crucial support level for the index as it is the confluence of 5-Day EMA (13,397), 23.6 retracement levels and the rising trendline formed by connecting lows of November 26 and December 2 as a close below this move could open gates for a further correction towards the levels of 13,260 and 13,150.

In the coming sessions, we could see a sideways action and during this sideways action, the level of 13,370-13,400 is likely to act as immediate support. On the upside, the level of 13,550 is likely to act as a resistance level. Overall, we expect Nifty to enter into a time consolidation phase, where the range for the broad range for the index would be 13,260-13,550.