Equity benchmark Nifty50 ended its five-day winning streak on March 15 amid weak global cues and rising US bond yields ahead of the US Fed meeting outcome on Wednesday.
Sensex closed 709 points, or 1.26 percent, down at 55,776.85 while the Nifty50 fell 208 points, or 1.23 percent, to 16,663. BSE Midcap and smallcap indices closed 0.68 percent and 0.88 percent lower, respectively, outperforming the benchmark index.
After a strong uptrend rally, the benchmark index witnessed profit booking at higher levels. Despite the tepid market condition, Nifty opened on a positive note but due to consistent profit booking at higher levels, it corrected sharply.
"Technically, in the short term market is still on the bullish side. However, on daily charts Nifty has formed a bearish candle which indicates a strong possibility of temporary weakness," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
Chouhan is of the view that as long as the Nifty holds the levels of 16,500-16,400, the uptrend is intact. On the higher side, the immediate hurdle would be 16,900-16,950. On the downside, any fall below 16,400 may increase further weakness up to 16,350-16,300.
"In the coming days, the markets are expected to remain volatile hence level based trading would be the ideal strategy for the day traders,” he said.
Markets encountered selling pressure after moving close to the 200-day simple moving average placed around 16,980.
Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in, pointed out that critical support for Nifty seems to be in the bullish gap zone of 16,447–16,418 levels, registered on March 10 and unless Nifty closes below 16,418, the trend may not favour bears.
Nevertheless, strength should not be expected unless Nifty closes above the 17,000 level, Mohammad cautioned. On such a close, a bigger and sustainable up move can be expected with initial targets present in the zone of 17,450–17,500 levels, he said.
Mohammad underscored investors should remain neutral but intraday traders with high risk-taking ability can short below 16,555 levels and look for a modest target of 16,450 by placing a stop above intraday high.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.