HDFC Securities says Nifty now placed at crucial support of 14200-14150

HDFC Securities says that Indian Benchmark equity indices extended their decline to a second session even as Maharashtra added to lockdown-like curbs amid rising Covid cases. The Nifty opened higher and kept falling through the day with the downfall accelerating post 1415 Hrs. At close, the Nifty was down 63 points or 0.4% at 14296. The broader markets did better with the S&P BSE MidCap and S&P BSE SmallCap indices both ending 0.5% higher. Volumes on the NSE were in line with recent averages. Among sectors, Pharma and Auto gained the most, while IT and Materials indices fell the most. Nifty once again failed to hold on to higher levels facing selling pressure. However the broader market did well on April 20. It took support again from 14207. However repeated testing of 14200 is not a good sign. 14200-14505 is the new band for the Nifty for the near term. A breach of 14200 again could result in accelerated selling. 

HDFC Securities highlighted that after showing a sharp weakness on Monday, Nifty witnessed lack of strength to sustain the intraday highs on Tuesday, it witnessed high volatility and finally closed the day lower by 63 points. Nifty opened on an upside gap of 169 points and started to show intraday weakness from the day's high since opening. The weakness intensified in the mid to later part and Nifty was able to show minor upside recovery from near the support of 14200 towards the end. The Nifty has been showing lack of strength to sustain the highs recently and we observe a formation of consistent lower highs and repeated testing of lower 14200 supports. After showing upside bounces from the lower supports for a few occasions, Nifty is now placed at the edge of decisive downside breakout of the lower support as well as the range movement of the last one month. As per the present high low range, a sustainable move below 14150 levels is expected to open a broad based weakness in the market and the potential downside target of the range theory to be watched around 13500 levels.
 

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Conclusion: The lack of strength to sustain the highs continued in the market and the Nifty is now placed at the crucial support juncture of around 14200-14150. The chances of downside breakout seem higher. A decisive below the support is likely to drag Nifty down to 13500 levels in a quick period of time. Any upside bounce from here could find strong resistance around 14370.