After showing higher level weakness from around 15,900 levels on Tuesday, Nifty slipped into weakness amidst a range movement on Wednesday and closed the day lower by 85 points. After opening on a positive note, the market has failed to sustain the highs and slipped into weakness in the early part of the session. It later shifted into a gradual further weakness with range bound action for the remaining part of the session. The opening upside gap has been filled completely.
Kotak Bank was the top loser in the Sensex pack, shedding over 1 percent, followed by L&T, Tata Steel, HDFC, TCS, Reliance Industries, HCL Tech and ICICI Bank. On the other hand, Maruti, Titan, Bajaj Finserv and M&M were among the gainers.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said, a long negative candle was formed, which engulfed the previous small negative candle of Tuesday. This signal weakness with range-bound action. Wednesday's pattern seems to have confirmed the double top formation as per intraday (60 min) timeframe chart. The negative implication of this intraday double top seems to have priced in partially and some more weakness could be in store.
The crucial daily support of 10-day EMA has been violated again on the downside at 15720 and the next support of 20 day EMA is now placed at 15610 to offer support for the market on further weakness from here. The present weakness is expected to be over in the next 1-2 sessions and the market could bounce up again from the lows. Immediate support is placed at 15600 levels, Shetti said.
Technically, the Nifty index has faced immediate resistance from the upper band of Bollinger and fell down for the day, said Sumeet Bagadia, Executive Director, Choice Broking. Furthermore, the index has formed a Bearish Marabozu candle on daily charts, which points out weakness for the upcoming session. "Moreover, an oscillator Stochastic also showed negative crossover, which suggests some correction. However, on the daily chart, the index has taken a support from 21 DMA, i.e., 15660 levels, if managed to sustain above the same, it can again show upside momentum," he said. At present, the Nifty seems to have resistance at 15,900 levels while immediate support comes at 15,500 levels.
On Thursday, the markets would be a trading range of 15,800/52,800 and 15,550/51,700 levels, said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities. Below 15,670/52,250, the Nifty/Sensex would quickly drop to the level of 15,550/51,700. On the other hand, if the Nifty/Sensex trades above 15,670/52,250, then the market would move to the level of 15,800/52,800, he said.