Nifty could plunge towards 15500 in worst-case scenario: Osho Krishan of Angel One

Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One Ltd said that a breach of 16000 on the downside with VIX near 29 could bring in a faster fall towards the mentioned targets of 15,400 – 15,000.

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In an interview with Zeebiz's Kshitij Anand, Krishan highlights that as far as levels are concerned, 16000 –15900 is to be seen as immediate supports, whereas on the higher side, 16500 followed by 16600 are considered strong resistances. Edited excerpts:

Q) Benchmark indices shed almost 3% in the week gone by and the weakness continues on Monday as well. What has led to the price action on D-Street?

A) Our domestic market has witnessed an intense beating as both the major indices Nifty and Bank Nifty plummeted over 2.48 and 5.55 per cent, respectively in the week gone by.

For the first few days, the Nifty50 remained in a range of 300 points with volatile swings, wherein 16500 on the index provided some support.

Though on Friday, the global worries once again spooked market participants by not only opening below this level but went on even to challenge 16200 on an intraday basis and finally concluded the week at 16245 levels.

If we meticulously observe Friday’s price action, we can see moderate damage in key indices, but individual stocks were falling in a bottomless pit.

Hence, markets are trading in an oversold situation for the last few days. This correction has a lot to do with the geopolitical concerns with respect to Russia and Ukraine.

So, until things do not stabilize there, the market is likely to sway on news flows and one should brace up for similar volatility and surprises on either side.

Although such war-like scenarios are always tricky, we can see a negative trend on weekly time frame charts. In addition, the falling slope of the ‘RSI-Smoothened’ oscillator is an indication of further weakness.

The Nifty50 has reached our initial target of 16200, we do not want to pre-empt any near-term bottom here.

Q) What are the key levels that one should track over the coming week on Nifty and Nifty Bank and how should investors prepare themselves?

A) From an investors’ point of view, this is certainly an excellent opportunity to bag quality propositions in a staggered manner. Still, it would be difficult for traders to say that worse is behind us.

We do not want to sound too pessimistic but looking at the current scenario, it won’t be surprising to see Nifty entering sub-16000 terrain.

In the worst-case scenario, Nifty could plunge towards the previous consolidation zone of 15500. However, we need to be abreast of how things pan out over global development. In case of any positive surprises in the coming period, we will keep a close eye on a few scenarios.

As far as levels are concerned, 16000 –15900 is to be seen as immediate supports, whereas on the higher side, 16500 followed by 16600 are considered strong resistances.

For Nifty Bank, all the indicators have turned southwards as the bears turned on their furious mode.

As far as levels are concerned, the previous swing low of 34000 odd levels could be considered the last technical support, breaching which things could get worse and attract fresh short positions towards the 33000 zone.

On the contrary, 35000-35200 is expected to act as an immediate hurdle, followed by the sturdy wall of 200 DEMA placed near the 36200 odd zones.

With the disruptor of the technical setup and the influence of the ongoing global crisis, the further movement of the index remains tentative.

Q) India VIX above 29. What does it suggest? Should investors brace for more volatility? What does the history suggest?

A) The volatility index is at an alarming zone, as any more upside in the VIX could have repercussions on the equity market. Technically, the index is on a stiff resistance zone and could refrain from soaring higher.

Although any breach above the 30 zones could be devastating for the market participants as bears could further tighten their grip and aggravate the overall market sentiments.

Historically, India VIX has tested the sub 30 levels for four consecutive years in which the year 2020 has seen the breakout, and we all have witnessed the carnage.

Hence, it is an alarming zone that we must keep close track of. At the same time, we also should understand that this is due to geopolitical concerns, and such issues are very sensitive and deceptive at times, we would take one step at a time.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)