Vinay Rajani of HDFC Securities has highlighted a bearish trend in the Nifty index, which has been steadily losing critical support levels over the past five sessions. The index's recent low of 23,229 indicates a break below the previous swing low of 23,262, signaling further potential downside.
Rajani pointed out that the Nifty is trading below its 10-, 20-, 50-, 100-, and 200-day moving averages, reinforcing the bearish outlook. He noted that unless the index rises above 23,800, the bearish trend is expected to continue. A key support zone is identified at 23,150, with resistance at 23,800.
Despite the overall market weakness, Rajani sees selective opportunities, particularly in the IT and metals sectors. He is bullish on LTIMindtree, recommending a long position in June futures around 4,300, with a stop loss at 4,180 and a target of 4,500.
“Bias is on the bearish side.”
Vinay Rajani, HDFC Securities
Conversely, Rajani advises shorting Bank of India June futures around 136.50, with a stop loss at 139 and a target of 131, citing continued weakness in PSU banks.
The current market scenario is characterized by a cautious outlook as key support zones are tested. While some sector-specific trades are viable, the broader market direction remains influenced by weakness in benchmark indices and profit booking in previously strong segments.
Background
The Nifty index has been under pressure, breaking below critical support levels and trading below key moving averages. This bearish trend has been exacerbated by profit booking in midcap and smallcap stocks, which were previously outperforming.
Investors should watch for any movements above the 23,800 resistance level for signs of a potential trend reversal. Meanwhile, selective stock opportunities in resilient sectors like IT and metals may offer profitable trades.
