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After a one-sided fall in the previous two sessions, the index seems to be continuing the trend today as well, currently trading 0.36% lower at 19,533, by 10:01 AM IST. However, as mentioned in my previous analysis, the broader direction is looking somewhat neutral, with the index facing demand from the lower levels and selling from the higher levels.
Reliance Industries (NS:), which is the second highest weighted stock in the Nifty 50 index, holding a weightage of around 9.35% should be carefully watched to gauge the trend in Nifty 50. The stock has also opened lower, in sync with Nifty 50 but it is reversing from its strong support zone.
Image Description: Daily chart of Reliance Industries
Image Source: Investing.com
There is a very good demand zone of INR 2,290 – INR 2,300 from where it has reversed multiple times in the recent past. In October 2023 alone, this zone is getting tested third time today. In May 2023, the stock fell to this support zone, tested two times and reversed sharply towards marking the highest level of 2023.
Hence, I would consider the current make-or-break level to be a trend-deciding area for both Reliance Industries and consequently, Nifty 50 to some extent. If this level gets breached, then we might see the fall getting extended in Nifty 50 which is also trading close to its support (mentioned in my previous analysis, the link of which is at the bottom).
Hence, this area gives a very low risk-to-reward ratio for long entries as the exit levels are quite close in case of a failed reversal but a successful bounce can deliver decent returns.
Read More: Nifty 50 Falls 150 Pts; Inches Closer to Support!
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