Nifty Index Experiences Volatility Ahead of Earnings Season

The Nifty index exhibited significant volatility on October 8, 2023, as traders navigated mixed signals ahead of the upcoming earnings season. The session mirrored a tense cricket match, with both bulls and bears actively participating. The index opened higher but faced fluctuations throughout the day, including a minor dip, a surge that reached an intraday high of 25,220, and subsequent declines before ultimately closing with some gains.

Despite the day’s ups and downs, the Nifty managed to achieve a higher high and a higher low for the fourth consecutive session. It successfully defended the 25,100 mark, finding support between 25,050 and 25,100. After climbing nearly 650 points from the September 30 low of 24,587, profit-taking among bulls appeared likely as market participants positioned themselves ahead of earnings announcements from TCS and Tata Elxsi, scheduled for later in the week.

The index’s important 61.8% retracement level stands at 25,119. Although the Nifty briefly broke above this threshold, it struggled to maintain momentum. The next key resistance level to watch is Monday’s high of 25,220, while support remains strong at 25,050 to 25,100.

Nifty Bank Shows Mixed Performance Amid Market Fluctuations

The Nifty Bank index experienced a similarly tumultuous session. It surpassed the previous high of 56,406, achieving a new swing high of 56,502, only to drop nearly 300 points from those heights. Despite this fluctuation, the index recorded gains for the sixth consecutive day, thanks to contributions from major banks like HDFC Bank and ICICI Bank.

According to Om Mehra of SAMCO Securities, the Nifty Bank is holding above all major moving averages, indicating short-term strength. He noted that the Bollinger upper band, positioned near 56,250, has been slightly tested, suggesting a potential pause in upward momentum unless further buying occurs. Support levels are identified near 55,800 and 55,500, with resistance projected between 56,500 and 56,700 based on Fibonacci analysis. Mehra cautioned that the formation of an inverted hammer, combined with a stretched short-term rally, may require careful observation at higher levels.

As market participants prepare for Wednesday’s session, there are no major catalysts expected. Traders will be keen to see if profit-taking continues at elevated levels or if caution prevails ahead of the earnings reports.

Market Analysts Weigh in on Short-Term Trends

Market analysts are observing that the short-term uptrend for the Nifty remains intact, although signs of profit booking are becoming apparent. Nagaraj Shetti of HDFC Securities highlighted that a decline below the 25,000 to 24,900 range could signal a short-term downward correction. Conversely, a sustained move above 25,200 could propel the Nifty towards a target of 25,450 in the near term.

Echoing similar sentiments, Shrikant Chouhan of Kotak Securities noted that the 20-Day Moving Average and the 25,000 to 24,950 zone are crucial support levels for the Nifty. He emphasized that the bullish trend remains as long as the index stays above these levels. Chouhan recommended that day traders consider buying on intraday dips and selling on rallies, with the 25,200 to 25,275 area acting as a barrier for bulls.

As traders brace for the earnings season, the market’s focus will be on the performance of key companies and the broader implications for the economic outlook.