Stocks picks of the day: Market in oversold zone; technical bounce back on cards
Episode 1483, Jul 25, 2019, 02:44 AM
The Nifty50 index ended the day on a negative note for the fifth consecutive session and closed well below the 11,350 mark, dragged by PSU banking, auto, and pharma counters.
The index formed the second leg of lower highs, and lower low formation since June 2019. Nifty should be able to find support around 11200 Fibonacci ratios in the near term.
A failure to do so would result in a quick drop towards 11100, which was the previous lower level for Nifty before the outcome of the general election of 2019.
Overall market breadth seems to be weak and the majority of indicators are in oversold zone, so a technical bounce from current level cannot be ruled out.
On the weekly interval, Nifty is trading above its 50-WEMA which acted as a support level on the previous two occasions. Currently, resistance is seen at 11500 levels above which momentum is expected to gain.
Failure to cross the 11500-11600 levels could push the index down below 11100-11000 levels before making the next momentum attempt. If 11,600 get conquered, we would suggest initiating long positions.