Nifty50

Current Price 8300

The Nifty 50 is up 6.4% for the day. While this is in line with global markets, in the last 20 years there has been only 10 prior occasions of a one day gain greater than 6%. By its own standards, this is good! However, by no means is the index out of the woods. Prices were in an uptrend since 2009 and with a sharp fall in the last 4 weeks, the index has turned bearish. At the current price, it is -33% from the 2020 high of 12430.

The Nifty needs to close above 9300 for three consecutive weeks to confirm that it is still in an uptrend. That’s 12% away at this time. While the bulls might be tempted to say it’s just another 2 sessions like today, the path ahead has roadblocks. The index is likely to face resistance between 8600 and 8800 (which is a gap down from last week). Above this, the Nifty is likely to face stronger selling pressure between 9500 and 9850. To maintain its uptrend, the index needs to negotiate these levels effectively.

Until then, the bears are still in charge. This means every rally will likely get sold into. If the downtrend resumes, the Nifty is likely to see buying interest at 7000 (2016 low) and below this the bears are likely to take a break and unwind their positions between 6500 and 6300.

Right now though, the nifty is heading towards its 11th best one day gain in the last 20 years (4994 sessions)!