Nifty faces further downside after breaking key support levels: Rohit Srivastava

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“The only factor that has been impacting us has been the rising dollar or rising bond yields, which saw some pullback into the Trump inauguration,” says Rohit Srivastava, Founder, Strike Money Analytics & Indiacharts.

We have seen, of course, India Vix rise sharply just ahead of the budget. The higher levels are getting sold into. Is it a very clear trend that it is going to be a lot more downwards versus in an upside movement for the market right now?
Rohit Srivastava: One hope that we end up having every day because we have all become global watchers is that if US markets are going up, then our markets would also see some recovery. Now, that has sort of not been happening, not just recently, but I think since the top that we have made in October, we have sort of diverged from global markets altogether.The only factor that has been impacting us has been the rising dollar or rising bond yields, which saw some pullback into the Trump inauguration. So, having said that, the next set of events, of course, are the budget and ahead of us and if we look at the structure of the market, it continues to be extremely weak. There is no sign of a trend reversal.
We also do not have some short-term oversold readings, though in the medium term, a lot of things have fallen. Some places we can say, okay, there is a lot of short in the system, maybe there can be a short covering bounce, but shorter-term readings are not showing even the smallest level of reversal to take that stance. So, we continue to think that Nifty has further downside.

Yesterday, we broke an important level, 23,100, which indicates that we can continue to slip towards 22,800 or lower. And today, even though Nifty is trying to hold on, it is not recovering above, say, 23,150 odd which is a critical intraday resistance that, again, would be a point from where we think it can head back down to sub-23,000. And so, yes, the downside risks remain pretty wide open and we should not be trying to buy the dips and get caught when you have a falling knife.

Almost a week back when you connected with us, you did highlight that any jump should be taken as a dead cat bounce. So, talk to us about the levels because your analysis has been bang on. Once we break that 23,000 level on Nifty 50, where do you see we are headed and also on the Bank Nifty, how much more pressure should we brace ourselves with?
Rohit Srivastava: So, 22,800 is what I am starting out with. We are not ruling out that it can slip below that, but that is the initial downside level we will be watching. Bank Nifty is being slightly weaker, so we do see scope for it to go down to around 46,750.

In this move, especially with today’s break that we are seeing right now, because it has sort of broken one of the interim levels, confirming that, yes, this is going to be another wave down to new lows. So, yes, 46,760 is what we look over there.

But on the Nifty, you said there is a threat that we can go below 22,000 as well?
Rohit Srivastava: I said 22,800 or lower. So, now how much below 22,800 is the judgment that we really have to take. 22,800 is going to be an important point because a lot of calculations were showing that as a support point for the market and it is possible that if you do not get too much selling in largecaps as you see in midcaps, then you find some kind of a low. But I will not pre-empt it. We are just going to watch what happens at that point of time.

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