Nifty50 index closed the day at 17,149.10, down 468.05 points or 2.66 per cent.
Independent Analyst Manish Shah said a wide-ranged candle after a continuous decline of the last five days suggests Monday’s selloff was an exhaustion candle.
“The low of the day at the 17,000-odd level hit the gap between 17,110 and 17,160 and the market gave a small bounce from this area. Another factor in favour of a possible bounce is that Nifty50 is showing a possible 5-0 harmonic pattern. The sell-off in the market has been sharp and severe. A bounce off the lows is imminent. It is prudent to avoid short-selling after such an extended move and brace for a sharp pullback,” Shah said.
Mazhar Mohammad of Chartviewindia.in said owing to the sharp correction of the last five sessions, a bounce can’t be ruled out going forward. In that scenario, the ideal trading range for Nifty50 shall be 17600-17,000 levels.
Mohammad said if the ongoing selloff is extended, the logical target for this downward leg can be below the 16,410 level registered on December 20. It looks prudent to avoid trading bets on the index, he said
Ruchit Jain, Lead Research at 5paisa.com said the index fall was accompanied by a 23 per cent surge in India VIX, which indicates the market is likely to be volatile in the near term.
“Traders should trade cautiously and avoid aggressive positions,” Jain said.
Rupak De, Senior Technical Analyst at LKP Securities said a sustained trade above 1,7150 may induce a relief rally in the market. “On the other hand, falling below 17,150 may trigger correction towards 17,000,” he said.
