Tech View: Be patient with Budget volatility, don’t rush to buy on dips

Nifty broke below the lower end of the Rising Megaphone pattern on the daily chart.

NEW DELHI: Nifty50 slipped below the 12,000 level on Friday and formed a bearish candle on the daily and weekly charts ahead of Saturday’s Union Budget. Analysts said as long as the index stays below that mark, it will remain vulnerable to selloffs.

It was the second day when Nifty closed below its 50-day EMA, said Chandan Taparia of Motilal Oswal Securities. “It broke below the lower end of the Rising Megaphone pattern on the daily chart. As long as Nifty remains below 12,000 mark, it could accelerate its weakness towards 11,929 and 11,830 levels. On the upside, hurdles are seen at 12,100 and 12,150 levels,” he said.

The RSI is making lower lows, confirming a weakening uptrend, said Aditya Agarwala of YES Securities. “Owing to the Union Budget on Saturday, the market is expected to remain extremely volatile and witness wild swings,” Agarwala said.

For the day, the index closed at 11,962, down 73.70 points or 0.61 per cent. “A favourable Budget may result in a temporary spike in Nifty and it shall ideally lead to sideways consolidation with the best case target of 12,272 for the next session. However, considering the fact that market is going to witness wild swings, traders are advised to remain neutral and avoid buying on dips as the technical outlook has turned negative,” said Mazhar Mohammad at Chartviewindia.in.