NEW DELHI: Nifty50 saw fag-end selling on Tuesday, but the index managed to protect the immediate support at 12,200 level. The index formed lower highs and lows for the second session, after negating the formation of higher highs and lows of the previous seven days. More consolidation is likely, analysts said.
The bears step on the accelerator whenever the index approached a cluster of resistances between 12,280 and 12,300 levels, said Aditya Agarwala of YES Securities.
“Nifty has been making lower lows for past three sessions, confirming the weakening strength in the uptrend. Multiple negative divergences on RSI suggest minor correction may be on the cards,” he said.
Chandan Taparia of Motilal Oswal Securities said while the index has formed a bearish candle on the daily scale, the market breadth was in favour of the advancing counters, which is a sign of relief for the bulls.
“Overall, the medium-term trend is still intact to positive. The index needs to hold above the 12,158 level to witness an up-move towards the 12,300 level,” Taparia said. A major downside support for the index exists at 12,000 level, he said.
The index closed at 12,212 for the day, down 50.75 points or 0.41 per cent.
Fag-end selling dragged the index towards the junction of the 40-hour exponential moving average and the hourly lower Bollinger Band, said Gaurav Ratnaparkhi of Sharekhan.
“The two in combination acted as a good support on Monday and the same is expected going ahead. Also, the hourly chart shows that Nifty has reached the lower end of a sideways channel that can offer additional support. Thus, the 12,210-12,200 range becomes a key support zone from a near-term perspective. A leap from this support zone can push the benchmark index towards the short-term target of 12,350,” said Ratnaparkhi.
Source: Economic Times