Nifty below 10700–A Pause or a Crack ?

Nifty has broken below 10700 which was roughly the base for last 4-5 sessions.

In our previous post Nifty50 at 10800 but Nifty10 at 12000 and Nifty20 at 11300. Time to Short in Parts ? had looked at how Nifty was stretched and its time to short in parts.

Lets look at Nifty now.

Nifty Technical View

• A classical Candle Reversal with a big down tick today.
• RSI has started showing Divergence after being overbought.
• The last intermediate top at 10550 and Gap at 10450-10500.
• Trendline support at 10400-10450.
• The short term trend has changed and will break the higher top higher bottom structure when it breaks at 10200.
• Targets on downside 10450-10500 and 10200-10250. Stoploss now should be at 10760.
• For now it looks like a pause with 10200/10450 to act as support. Review further when it breaks 10200.
• Broader market may turn down only on a break below 10200. Till that time continue to look for stock specific action.

Nifty10 and Nifty20 – Showing signs of slowing momentum.

• Nifty10 Equi-Weight and Nifty20 Equi-Weight showing signs of a pause and momentum reducing finally.

Bank Nifty – No More a Leader – 20900-21000 an important support.

• No more a leader and that makes it a little tough to trust the breakout and breakdown in this now. 
• 20900-21000 remains an important support below which it gets much weaker.

Reliance Industries – The Leader and The Largest Weight

• In our post - Double Dip or New Bottom or a Higher Bottom in Nifty ? we had looked at Reliance and how it could go up to 1800-2200 on a break of 1620-1630 which would make the change of a Double Dip on Nifty much lower.
• Reliance Industries still has not be able to break below the gap done 2 days back at 1880-1900.
• Only a dip below 1780 will indicate a pause and may start impacting Nifty meaningfully on downside.

Conclusions

• Time for a Pause in Nifty with downside supports at 10450/10200.
• The Momentum is finally pausing in larger names.
• It can convert into a major crack only on follow up selling.
• Broader market stock specific momentum may reverse on a break below 10200.

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