NEW DELHI: The Nifty50 on Thursday plunged 225 points but formed a bullish candle on the daily chart, as it somehow managed to close above its opening mark.
The index hit a swing low of 10,139 as it formed a long upper wick on the daily chart, suggesting that the bias was fairly weak and the recovery was minor, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
For the day, the index declined 225.45 points, or 2.16 per cent, to close at 10,234.
In terms of the wave structure, the Nifty kicked off the fifth leg of an impulse structure on the downside from the key hurdle in the 10,480-10,500 zone. Last session, the index retested the lower end of the reverse channel that it had broken recently. This added to the selling pressure.
The index looks on course to hit the short-term target of 10,016. One can adopt a sell-on-rise strategy as long as the index trades below its swing high of 10,482, said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan by BNP Paribas.
Shetti does not see any respite for traders and expects Nifty to revisit Thursday’s low of 10,139 over the next few sessions.
Chandan Taparia of Motilal Oswal Securities said the index has been making lower tops and lower bottoms on the weekly scale, and needs to negate the same with a decisive hold above 10,200. “Otherwise, the weakness in the market could continue,” he said.
Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory, Chartviewindia.in, said should the index fail to sustain above 10,138, it would initially test the March 2018 low of 9,950 to complete the corrective structure.
“Contrary to this, if the index manages to sustain above 10,335 on a closing basis, it can renew the chances of a relief rally going forward,” he said.
Source: Economic Times