Geo-political volatility fuels negativity

Nifty ends down following weaker global cues as the contraction in range (comparatively) which was observed for the last few days gave a downside breakout, this was further signaled with exhaustion in breadth the market has witnessed in the last few days.

The haunting news of capital gains tax which was making rounds on social media was further cleared today, despite that, it is the geo-political cues that would drive rather than domestic news and rumors.

Technically it's a resistance which was previously mentioned and the market is facing that at 16,900 – 17,050, a big downside gap zone of February 24. Our volatility bands which have been contracting for some time (30 minutes timeframe) are now expanding indicating the trend may further expand. As per the Bar chart, the range for intraday remains quite elevated with ATR at 370+ levels.

On Daily TF, short term trend remains bearish as long as the Nifty is below 17,342 and any negative sentiment will be magnified given the current volatility. Hence, the momentum and breadth have to be strong and sustained and along with that, it must have extreme positive readings to reverse the trend on the positive side. Resistance for Nifty remains at 17,030 – 17,340 while downside support is at 16,410 – 16,090.

(The author is technical analyst at Finversify)