NEW DELHI: The Nifty50 tumbled over 1 per cent on Wednesday and in the process formed a solid bearish candle on the daily chart. The index formed lower high and lower low for the sixth session in a row. Analysts believe unless Nifty50 negates this trend, the market may remain negatively biased in the short term. For now, minor support is seen at 10,396.
For the day, the index settled 106.35 points, or 1.01 per cent, lower at 10,430, decisively breaking its 100-day SMA support at 10,470.
“A key support has been broken at the 10,470 level. The outlook for Thursday remains weak. We expect the index to test the low of 10,350, 10,300 levels over the next few sessions. Holding short positions and selling on any intraday rise would be a prudent strategy for the short term,” said Nagaraj S Shetti, Technical Research Analyst at HDFC securities.
Chandan Taparia of Motilal Oswal Securities believes the index needs to negate the formation of lower highs and lower lows to get any short-term stability, else the ongoing weakness in the index may continue to persist.
This downswing appears to have a logical target at 10,146 level, which should sustain to pave way for a multi-week corrective structure, said Mazhar Mohammad of Chartviewindia.in.
“A minor support is placed at the 10,396 level. On the upside, a close above 10,533 can be considered an initial sign of strength," Mohammad said.
Vikas Jain, Senior Analyst at Reliance Securities, expects the Nifty50 to find support at the 10,320 level, which coincides with its long-term 200-day moving average and its 61.8 per cent Fibonacci Retracement level of the prior rally from 9,952 to 10,929 levels.
The daily momentum indicator Stochastic, meanwhile, has turned bullish after signalling oversold zone, said Rajesh Palviya of Axis Securities. It is signalling possible upside, he said.