- The Nifty broke out of a rising channel, indicating that the prior uptrend has ended.
- The index has broken through the trendline support and fallen below the short-term moving average.
- The decline has been made worse by the mid-and small-cap equities’ poor risk-reward ratio
The Nifty broke out of a rising channel, indicating that the prior uptrend has ended and that a slump may be about to commence. The Relative Strength Index (RSI) is vulnerable to selling pressure because it is exhibiting a bearish crossing and has fallen below the 50 mark.
The index has broken through the trendline support and fallen below the short-term moving average (20 DEMA), which serves as its immediate support.
Sensex and Nifty
Since the midcap and small-cap markets are already under a lot of strain, traders should continue to hold a bearish bias in the index and take advantage of any bounce to initiate short positions. They should also refrain from increasing their positions that are losing money and give preference to index majors.
The decline has been made worse by the mid-and small-cap equities’ poor risk-reward ratio and their sustained premium valuations. While gold and FMCG provide some protection, no underlying problem is apparent to undermine the long-term growth outlook for domestic midcaps.
The Fed’s capacity to undertake impending rate decreases was questioned by the world due to the US inflation rate’s continued persistence. While there are indications that domestic inflation is abating, central banks may decide to consider reducing interest rates in the second half of 2024 due to the trend of declining global commodity prices. This might be advantageous for stocks.
Following a significant sell-off in stocks, as many as 1,010 stocks were locked at their corresponding lower circuits on the BSE at 02:32 pm. Only sellers were visible at these counters. To protect the interests of small retail investors, authorities have acknowledged the situation and suggested possible legislation.
