Nifty Technical Outlook: Investors Are Advised To Exercise Caution

The bellwether NIFTY index, struggling to build any serious momentum for the past three weeks, seems to have finally run out of steam. Over the past two weeks, I had been cautioning investors regarding a possible turn in the overall direction of the index - especially when the ominous inverted hammer candlestick made its appearance a couple of weeks back.

The stochastic oscillator completed a bearish crossover too, with the red line overtaking the blue one. Essentially, this signals that the bulls (in the medium term, at least) have wrested control to the bears.

We're quite likely to see the index meandering down to around 10,000 levels again (the lower band of the Bollinger Band), as the extended time correction that began in January continues unabated. Although the shape of the channel indicates that the mood may not be altogether bearish, investors would be making a smart move by not overexposing themselves to equities until a firm direction is established. The NIFTY isn't showing signs of breaking out of this narrow 1,000 point band anytime soon.