Technical Analysis of Market Post-Election

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Nifty Technical Outlook

The Nifty index has exhibited considerable volatility following the election results. Here is a detailed technical analysis of the Nifty, incorporating key support and resistance levels, moving averages, and potential price targets:

Key Technical Levels

Immediate Support: 21,200

This level represents a critical support point, being the confluence of the result day panic low and the 200-day Exponential Moving Average (EMA). The index's reaction at this level will be crucial for determining the near-term direction.

 

Key Support Area: 20,500-20,200

A breach below the immediate support could lead to a decline towards this key support zone. However, from a medium-term perspective, this area is expected to hold.

Resistance Levels

Immediate Resistance: 23,300-23,500

This range has acted as a significant resistance level. In the recent session, the Nifty faced a sharp decline upon testing this resistance.

Year-End Target: 24,300

Based on our analysis, we maintain our year-end target for the Nifty at 24,300. This target is supported by the overall positive outlook for the Indian economy and corporate earnings growth.

 

Moving Averages

200-Day EMA: 21,200

The 200-day EMA is a widely observed technical indicator that represents the long-term trend. The Nifty's bounce from this level indicates strong support.

52-Week EMA: Trend indicator showing the long-term market direction.

Nifty IT Technical Outlook

The IT sector, a significant component of the Nifty, is showing promising signs of recovery based on technical indicators:

100-Week EMA: The Nifty IT index is rebounding from its 100-week EMA and the previous breakout area. This indicates a potential resumption of the uptrend.

Target Level: 35,800

This target is derived from the 61.8% Fibonacci retracement level of the decline from 38,559 to 31,320.

Nifty Pharma Technical Outlook

The Pharma sector is at a critical juncture, poised to break out of its recent trading range:

20-Week EMA: The Pharma index is on the verge of breaking above the last three months' range (18,200-19,400).

Target Level: 20,600

This target is based on the measuring implication of the three-month trading range.

Nifty Auto Technical Outlook

The Auto sector, supported by rising middle-class income and a shift towards electric vehicles, shows a robust technical setup:

21-Week EMA: Historically, the index has respected this rising trendline, which continues to provide support.

Target Level: 25,200

This target is based on the historical trendline and the 21-week EMA.

Technical Charts and Data:

Nifty Technical Levels:

Metric

Level

Immediate Support

21,200

Key Support Area

20,500-20,200

Immediate Resistance

23,300-23,500

Year-End Target

24,300

Sector-Specific Technical Targets:

Sector

Key Indicator

Support Level

Resistance Level

Target Level

IT

100-Week EMA

31320

35,800

35800

Pharma

20-Week EMA

18,200-19,400

20600

20600

Auto

21-Week EMA

Rising Trendline

25200

25200

Chart Analysis:

Nifty Index Movement: A chart depicting the Nifty's movement over the past year, highlighting key support and resistance levels, and the 200-day EMA.

Nifty IT Index: A weekly chart showing the IT index's rebound from the 100-week EMA and the target level of 35,800.

Nifty Pharma Index: A chart illustrating the Pharma index's potential breakout above the three-month range and the target level of 20,600.

Nifty Auto Index: A chart showing the Auto index's respect for the 21-week EMA and the target level of 25,200.

Conclusion

The technical analysis of the Nifty and its key sectors (IT, Pharma, Auto) provides a comprehensive outlook for the market post-election. Investors should monitor these technical levels closely and consider them in their trading strategies. The technical indicators suggest that, despite short-term volatility, the market presents buying opportunities with significant upside potential by the year-end.

Conclusion

The post-election market landscape in India presents both challenges and opportunities. With a coalition government at the helm, political and economic stability will be crucial. However, sectors like IT, Pharma, and Auto are poised for growth, driven by favorable economic policies and global trends. Investors should focus on large-cap and quality mid-cap stocks, particularly in the mentioned sectors, to capitalize on the expected market movements.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

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