Nifty struggles below 200-DMA amid narrow range and low volatility
Nifty spent the truncated week struggling to stay afloat just below the key resistance levels. With just four working days, the Nifty resisted each day to the 200-DMA and failed to close above that point. The trading range got much narrower, and the Nifty oscillated in just 291.65 points before closing with a minor gain. The volatility also cooled off as compared to the previous week. Against the surge of 15.48%, this week saw India VIX declining by 12.17% to 13.24. Following strong consolidation, the headline index closed with a modest weekly gain of 225.90 points (+0.96%).
From a technical perspective, we are now at a very crucial juncture. On the one hand, the Nifty has closed below the 200-DMA placed at 23,861. On the other hand, the Index is just above the 50-week MA at 23,568. Rounding off, this puts Nifty in a very fragile range of 23,860-23,500. The Nifty will have to stay above the 23,500 level; any violation of this level will instill prolonged weakness in the markets and push them into intermediate corrective trends. It also needs to be noted that the technical rebound would sustain only if Nifty is able to cross and close above its 200-DMA. The longer the Nifty stays below 200-DMA, the more vulnerable it will be to testing the 50-week MA again.
Given the holiday season, no major moves are expected globally. The Indian markets are likely to start on a quiet note. The levels of 24,000 and 24,150 are likely to act as resistance points. The supports come in at 23,600 and 23,450.
The weekly RSI is 43.74;
