Nifty 50 has broken the important support level of 11750 on a closing basis in the previous session, it may slide further towards 11600-11500.
Taking cues from global peers, BSE Sensex and Nifty 50 fell up to 2.6 per cent in Thursday’s session. At close, investors had lost Rs 3.28 lakh crore in wealth today. S&P BSE Sensex ended 2.61 per cent lower at 39,728.41, while the Nifty 50 index settled at 11,680.35, down 291 points, or 2.43 per cent. The bloodbath on Dalal Street wiped off all the gains made in the last six sessions. Even the 10-day rally failed to push Nifty 50 above the January high (all-time high) of 12,431. According to the technical analysts, Nifty 50 failed to follow the continuation pattern and that triggered extreme weakness in the market on Thursday. “Nifty is heading towards 10500 on the minimum side. On the higher side, 11780/11800 would be key hurdles and traders should look for selling short on the Nifty with a final stop loss at 11850,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.
Minor pullbacks possible
While given the sharp nature of the fall, some minor technical pullbacks can be witnessed in the coming days. However, the possibility of the NIFTY testing the 50-DMA, which presently stands at 11,430 cannot be ruled out. “The zone of 11430-11500 can act as potential pattern support in form of a falling trend line which the NIFTY took out on its way up,” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst, Gemstone Equity Research & Advisory Services, told Financial Express Online. This trend line began from 11800 and joined the subsequent lower tops. “This trend line, which was a resistance earlier, is now expected to act as support,” Vaishnav added.
Falling trendline: Where will Nifty find the bottom?
In the current scenario, an analyst at Religare Broking Ltd advised investors to maintain short positions and limit trades largely to the index majors. Ajit Mishra, VP – Research, Religare Broking Ltd believes that 11,600 would be the next critical support in Nifty 50. India VIX, the volatility index jumped over 9 per cent to end above 22 levels.
According to the technical analyst at Axis Securities, as Nifty 50 has broken the important support level of 11750 on a closing basis, it may slide further towards 11600-11500, however, on the higher side 11950-12050 are likely to act as resistance zone in near-term. “Once the Nifty 50 index manages to cross above 12050 it will resume its uptrend and can scale up towards 12200-12300,” Rajesh Palviya, Head Technical & Derivatives, Axis Securities, told Financial Express Online.