Nifty plunged 371 points or 2.18 percent on Monday amid Omicron fears to close at four-month low at 16,614 levels. This is the lowest closing for Nifty since August 23, 2021. Short term trend of the Nifty remains weak as Nifty is forming lower top lower bottom formation on the daily chart. Nifty is also trading below its all-important short-term moving averages.

During the last week, Nifty resumed its intermediate downtrend after two weeks of gains. On the weekly chart, Nifty has closed below the 20-week EMA (exponential moving average). The 14-week RSI (relative strength index) is still in decline mode and not oversold, implying potential for more downsides in the coming weeks.

In the derivatives, we have seen aggressive Call writing at 17000 levels. Moreover falling 5-day EMA is also currently placed at 17000 levels. Therefore, unless Nifty closes above 17000 level, short term trend will remain bearish.

On the downside, Nifty is likely to find support around 16,000-16,300 levels where 50-week and 200-day EMAs are placed. These levels also coincide with a major trend line support that has held the major lows of 2021.

To sum it up, we believe that, short term trend of the Nifty remains weak. Therefore, our advice is to remain cautious till Nifty closes above the 17,000 levels.