nifty: Tech View: Nifty50 bears in driving seat; any recovery will be vulnerable to selloff, say analysts

Nifty50 on Monday cracked over 3 per cent and closed below the 16,850 level. The index formed a bearish candle on the daily chart and at the day’s low it was close to its 200-day moving average. In the previous session, the index had fallen below the 50-day moving average. Analysts said the bears are on the driving seat and any rise going ahead would be vulnerable to selloff.

Mazhar Mohammad of Chartviewindia.in said the index at an intraday low of 16,809 levels erased all the gains registered between January 25 and February 2.

“It will be a matter of time for Nifty50 to breach the corrective swing low of the ongoing intermediate downtrend, placed at 16,410 levels. As the single session selling is overdone, a pullback attempt can be seen in the next one or two trading sessions, which shall remain vulnerable for a selloff, especially when the bulls make an attempt to enter into the large bearish gap zone of 17,099 and 17,303 levels,” Mohammad said.

For the day, the index closed at 16,842.80, down 531.95 points or 3.06 per cent.

Shrikant Chouhan of Kotak Securities said the Nifty50 has formed a bearish gap down candlestick formation, which suggests further weakness from the current levels. “The Nifty is now trading near the 200-day SMA level and as long as the index is trading below 17,050, there are chances that it could hit 16,750 and 16,550 levels,” he said.

Chandan Taparia of Motilal Oswal Securities said that the index has been forming lower high-low for the last two sessions. “Now till it holds below the 17,000 level, bounces can be sold into. Weakness can be seen towards the 16,600-16,500 range while upside hurdles can be seen at 17,100 and 1,7300 levels,” he said.