NEW DELHI: The Nifty50 saw strong selling pressure on Thursday as it closed below its crucial support at the 100-day moving average. The 50-pack formed a large bearish candle on the daily chart with higher trading volumes. Analy sts said a big correction could be in the offing should the index fails to respect its support in the 10,670-620 range.
“Thursdays correction intensified as Nifty broke the 10,735 level on Wednesday. In the process, the index went on to retrace its recent upward move by 61.8 per cent. The index now trades around the upward sloping trend line in the vicinity of 61.8 per cent and 100 per cent retracement levels at 10,670 and 10,620, respectively,” said Sameet Chavan of Angel Broking.
Chavan said these are make or break levels for the index and, thus, Fridays session would be crucial in dictating the markets near-term direction.
For the day, the index dropped 120.25 points, or 1.11 per cent, to 10,672.
“Recently, Nifty turned south from the upper end of a crucial range at 10,920, also being the 100-DMA. It closed below its 200-DMA placed at 10,780 and is now approaching the 50-DMA. A move below the 10,670 mark will drag it lower to the 10,450 level in coming sessions, while a trade above its 200-DMA i.e. 10,780, will trigger a short-covering rally to 10,920 level,” said Aditya Agarwala, Technical Analyst at YES Securities.
Daily indicators are placed negatively, supporting the weakening sentiment, said Rajesh Palviya, Head of Technical & Derivatives Analyst, Axis Securities, who believes a move above the 10,680-10,700 range could trigger a pullback rally towards 10,750 & 10,780 levels.
A long bear candle appeared on Thursday after the formation of a new lower top at 10,923 on January 1. Niftys short-term trend looks weak, and next support to watch will be at 10,535 level, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
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