Trade Setup For Oct 21: Nifty Shows Bearish Formation On Daily, Weekly Charts

India's benchmark stock index, NSE Nifty 50, is showing negative sentiments on both daily and weekly charts, according to analysts.

"Technically, on weekly charts it has formed a bearish candle; on daily charts it is holding a lower top formation, which is largely negative," said Amol Athawale, vice president of technical research at Kotak Securities.

The larger market texture is still on the weak side, according to Athawale. They stated that a fresh sell-off may only be possible after the dismissal of 24.650 and 80.800 for Nifty and Sensex, respectively.

The analyst further said Nifty and Sensex could slip till 24,500-24,450 and 80,500-80,300, respectively.

Conversely, the area around 24,900/81,500 could serve as a key resistance level for buyers, the analyst said. "If the price breaks through 24,900/81,500, we may see a continuation of the retracement trend, potentially reaching 25,000-25,050/82,000-82,200."

For Bank Nifty, Athawale said that a 50-day simple moving average would act as a key trend indicator for short-term traders in Bank Nifty. If the index stays above this level, it could rise towards the 20-day SMA or 52,500, with potential further gains pushing it up to 53,000. However, if it falls below the 50-day SMA or 52,500, the uptrend may become precarious, prompting traders to consider exiting their long positions, according to the analyst.

The slowdown in growth, along with narrowing net interest margins, indicates that banks and NBFCs may face continued correction for the next few quarters, according to Krishna Appala, senior research analyst at Capitalmind Research.

"So far, robust domestic institutional investors and systematic investment plan inflows have sustained the market's strength. However, if corporate earnings fail to match the high valuations, we may see either a price or time correction in the broader market to stabilise things," Appala said.