Nifty Defence Index Nears Key Support as Bearish Signals Emerge
The Nifty India Defence Index, which has been on a tear since March, is now approaching a critical juncture. After surging 48% from March to May, the index rose another 35% from May 9 to June 6. However, the momentum has since fizzled out, with a correction of 6% in the recent trading sessions. The index is now nearing its 20-day moving average (DMA) of 8,641, a key support level that, if broken, could lead to a further decline to 8,232.
Resistance, on the other hand, lies in the range of 8,861-8,880. The next few trading sessions will be crucial in determining the direction of the Defence Index.
Recent Performance
The Defence Index has been one of the best-performing indices in the Indian market this year. From March to May, it surged 48%, outpacing the broader market. The index’s momentum continued into June, with a 35% gain from May 9 to June 6. However, the rally has since lost steam, with the index correcting 6% in the recent trading sessions.
Technical Analysis
From a technical perspective, the Defence Index is now approaching its 20-DMA of 8,641. A break below this level could lead to a further decline to 8,232. On the flip side, if the index manages to hold above 8,641, it could retest the resistance range of 8,861-8,880.
The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators are also flashing bearish signals. The RSI is currently in the oversold territory, while the MACD is showing a bearish crossover. These indicators suggest that the Defence Index may continue to struggle in the near term.
Key Levels to Watch
The 20-DMA of 8,641 is a key support level that, if broken, could lead to a further decline to 8,232. On the other hand, resistance lies in the range of 8,861-8,880. A break above this level could lead to a retest of the recent highs.
Conclusion
The Nifty Defence Index is nearing a critical juncture, with the 20-DMA of 8,641 serving as a key support level. A break below this level could lead to a further decline to 8,232. On the other hand, if the index manages to hold above 8,641, it could retest the resistance range of 8,861-8,880. The next few trading sessions will be crucial in determining the direction of the Defence Index.
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