Analysts said there are good chances that the index may see some more downside but advised traders to remain neutral for now. They see 17,150 levels as the immediate hurdle for the markets.
Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan, said the index had reached near a falling trendline on the hourly chart, which was around 17,200, but it tanked on Wednesday.
“Structurally, the price action over the last few sessions has taken the form of a triangular pattern, which is expected to be a continuation pattern in this case. The index can witness a brief consolidation in the range of 17,150-16,900 and can ultimately break out on the downside. Thus, from a short term perspective, the Nifty is expected to test the swing low of 16,824, below which 16,600 will be the subsequent target to watch out for, “Ratnaparkhi said.
For the day, the index closed at 17,038.40, down 162.40 points or 0.94 per cent.
Mazhar Mohammad of Chartviewindia.in said the candle for the day looked like a Hammer, as the index smartly recovered from the intraday low of 16,958 level.
“Considering the recent volatility, this pattern may not have any significance but Nifty50 may be chalking out a triangular structure, which seems to be nearing its completion. Hence, it can be difficult to project the near term direction of the market as it may break out in either of the directions. It looks prudent to remain neutral on the index until some signs of strength are visible,” Mohammad said.
Shrikant Chouhan of Kotak Securities said the market is witnessing non-directional activity, noting a breach below the 50-day SMA post the gap down opening.
“For the traders now, 17,125 would be the immediate resistance level. If the index clears the resistance of 17,125, it may hit the level of 17,200. Trading below 17,000 could increase further weakness. Below 17,000, the chance of hitting 16,900-16,850 would turn bright,” Chouhan said.
