HDFC Securities highlights that the next lower support on Nifty to be watched is 14335

HDFC Securities says that Indian benchmark equity indices declined the most since May last year as a sell-off in bond markets across the globe sparked a collapse in global equities. The Nifty opened gap down and kept falling through the day and closed almost at the intra day low. At close, the NSE Nifty 50 index shed 568 points to end 3.8% lower at 14529. For the week, the Nifty closed 3.02% lower, falling for the second consecutive week.

All 50 constituents on the Nifty index ended with losses in today's session. All sectoral indices ended lower with the Nifty Bank index emerging as the top sectoral laggard followed by Auto, Metals, Media and IT. The Nifty Midcap index fell 1.6% while the Smallcap index ended with losses of 1.2%. The India Volatility Index ended 22.9% higher at 28.14, highest since July 2020. Volumes on the NSE were the highest in three months. 

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Global stocks fell on Friday, with Asian shares down by the most in nine months, as a fall in global bond markets sent yields flying and alarmed investors amid fears the heavy losses suffered could trigger distressed selling in other assets. Yields on the US 10-year Treasury note eased back to 1.494% from a one-year high of 1.614%, but were still up a startling 40 basis points for the month in the biggest move since 2016.
 
Nifty opened with a downgap and hence has formed a bearish evening star formation on daily charts on Feb 26 as was expected by us on Feb 25. In the process, near term support of 14635 has been breached. Now the Nifty could head towards the 14281-14336 band over the next few days with some intermittent bounces. Advance decline ratio keeps tracking the Nifty suggesting that the investors are taking action on the broader stocks based on the Nifty moves. 
 
After showing an upmove with range movement on Thursday, Nifty witnessed bloodbath on Friday and closed the day with sharp intraday loss of around 568 points. After opening on a downside gap of around 209 points, Nifty shifted into a consistent weakness till the mid part of the session. Minor upside recovery of the mid to later part has turned into a sell on rise and Nifty slipped further towards the end to close near the lows. The opening downside gap remains unfilled.
 
A long bear candle was formed, that moved below the immediate support of 14635 levels and closed lower. Hence the intraday high of Thursday at 15176 could be considered as a new lower top formation. This is the first time that Nifty formed a lower top in the last few months, which is a negative indication. Next lower supports to be watched at 14335, which is an opening upside gap of the 2nd Feb-upside gap formed after the union budget. Presently, Nifty is sliding down towards this support at 14345 and one may look for the opportunity of another upside bounce unfolding from the lows.
 
Conclusion: The recent upside bounce of the last two sessions has been negated sharply on Friday and the short term trend has turned down. One may expect further slide down towards the next crucial support of around 14350-14300 levels in the coming few sessions, before showing any possibility of an upside bounce. Upside rise from here could find stiff resistance at 14640.