After making a new record high at 15,800 levels in the early session, the benchmark index corrected more than 0.5 percent or 100 points in a day to close at 15635.35 levels, while the BankNifty slipped more than 250 points to settle at 34,800.50 levels.
Technically, on the daily chart, the Nifty index has formed a long bearish candlestick at the top of the trend, which could be a sign of trend reversal, said Sumeet Bagadia, Executive Director, Choice Broking. Moreover, on four hourly charts, the index has formed a Bearish Engulfing pattern, which indicates bearishness in the counter for the near term. In addition, a momentum indicator RSI has slipped from the overbought zone and Stochastic witnessed a negative crossover on the daily time frame that suggests downward move in the counter for the upcoming session. At present, the Nifty seems to have resistance at around 15,800 levels while immediate support is at 15,430 levels, he added.
All the major sectoral indices ended in the red and selling pressure was witnessed in auto, energy and telecom stocks. Nifty 50 showed a sharp reversal from an important resistance level of 15,800. Mohit Nigam, Head-PMS, Hem Securities said,15,500 will be an important support for short-term in Nifty 50 and it may be a good buying opportunity around these levels. "Immediate resistance levels for Nifty 50 are 15,800 and 16,000 while key support levels for Nifty 50 are 15,500 and 15,300. Increase in COVID cases in China and volatility in international markets are creating some resistance in the rally. Wednesday's correction can be short-term in nature due to some profit booking since we have been making fresh all time highs since past few sessions regularly", he added.
It’s a bearish reversal formation for the market and in the next one or two sessions, the market may fall to 15,500 or 15,450 (51,600/51,300) levels, said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities. The sell-off was mainly in small-cap and mid-cap stocks, which had seen strong momentum over the past few weeks, while other sectors too displayed weakness today.
