Nifty faces resistance at key levels, downtrend likely to continue: Rohit Srivastava

"Similar levels would be closer to around 49,100 to 49,200, I think in that range we should see resistance going forward and probably another leg downwards could start from there and we could be headed towards 46,600 in the days to come," says Rohit Srivastava, Founder, Strike Money Analytics & Indiacharts.


Even though we are seeing a recovery coming in the market, but as far as Nifty is concerned, we are pretty range bound there. We are working with certain levels here. Do you see a breakout from these levels? What are the levels that you are working with?
Rohit Srivastava: So, we think that the Nifty has been in a meaningful downtrend. I do not think the downward trend has ended. We do have near term resistance close to 23,300, 23,350 and most probably we will see selling pressure again build up as we get closer to those levels.

My sense is that we probably headed back down towards 22,800 in the coming days and that is what we need to watch out for. So, this is sort of a dead cat bounce in what is an overall downward trend and the downtrend is most probably, like I said, not over in Bank Nifty.

Similar levels would be closer to around 49,100 to 49,200, I think in that range we should see resistance going forward and probably another leg downwards could start from there and we could be headed towards 46,600 in the days to come.

But also tell us, what is the outlook when it comes to the broader markets because every time in the recent days that we have seen the markets in the green, it has been largely the broader markets that have supported this rally, especially yesterday and today also the broader markets are outperforming. However, last week when we were in the red, it was the smids that were taking the biggest cuts as well. The kind of volatility that comes with the broader markets, would largecaps be a good bet right now or are you seeing some show of strength coming in from the broader markets also right now?
Rohit Srivastava: What you are saying is a day-to-day thing. Like, markets are bounced today, so midcaps are rising more, but in the days when they are down, they fall in much more. So, if we actually start doing a one-week kind of analysis, then you will probably see that the worst performers are coming in the mid and smallcap segments.

I mean, they have been down around 5% to 6% is what I am seeing on the screen for the mid and smallcap indices which is much more than what the Nifty itself has actually done, which is only around 1.89% on a one-week basis.
So, that is the big picture that if you remain in a downtrend, the broad market, the mid and smallcaps tend to fall much more. Though on up days, you might see them bouncing a little more, that is just the high beta nature of the segment. So, if you are overall in a downtrend, you will still see that segment fall.

The contrary is that the largecap, which is the Nifty itself having fallen less, is it going to catch up with the midcaps in terms of the selloff? I do think that should happen, but you cannot always be certain. Sometimes the Nifty holds back a lot longer than the broad market. We saw that in 2018, 2019 for a long period of time Nifty only gave up much-much later.

But I do think, at least in this leg into the budget as we are going into the second half of the month, you have the swearing-in of Donald Trump also coming up, all those uncertainties would keep the pressure on the downside and the possibility that largecaps also sell off slightly more harder than they have so far, but that is not going to stop the midcaps from falling.


Let me come to you about Nifty Bank because Nifty Bank, as I can see, in the last three days, it has been moving past the previous day's high. Is Nifty Bank going to lead from the front, the recovery, because Nifty Bank has been outperforming at least the benchmark yesterday. Also, we saw a bigger recovery coming in on Nifty Bank and today also Nifty Bank has been an outperformer.
Rohit Srivastava: Yes, so it has held up again well here. But over time, it has fallen more than the Nifty if we just take the last five to ten days into account. If there is any segment that can hold out, it is possibly FMCG because it fell the hardest at the beginning and it has come back. The FMCG index is currently at around 55,300. It has taken support at this level two times in the past. So, we will watch it closely. I am not saying we are already done and this is final because sometimes what the market does, it shakes out weak hands, it may break the 55,300 level for a day or two and then rebound.

We just need to watch that whether it happens because that is where I would probably look for the possibility of some kind of near-term outperformance on a one- to two-week basis provided the level holds. So, we need to see it actually happen but that is I think the only place, otherwise rest, other than that banking is still weak, does not show signs of a bottoming yet.