Nifty ended half a percent lower after two consecutive days of gains on April 5 owing to profit-booking in banking and financial heavyweights.
The benchmark index opened at 18,080.60 against the previous close of 18,053.40 and touched the intraday high and low of 18,095.45 and 17,921.55 respectively, trading in the range of 174 points.
The index closed 96 points, or 0.53 percent, lower at 17,957.40.
"Markets had rallied sharply in the last two sessions and outperformed other Asian peers, but the bears were back in action with investors preferring to book profit. Financial stocks, which triggered a massive rally in the broader markets a day before, emerged as the primary reason behind the fall in key benchmark indices, despite buying interest seen in auto and FMCG stocks," Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, pointed out.
Nifty formed a double top kind of formation on the intraday chart which indicates further weakness from the current levels, Chouhan said.
"The index has also formed a bearish candle on daily charts which is broadly negative. However, the medium-term texture of the market is still on the positive side," Chouhan added.
"We are of the view that as long as the index is trading below the level of 18,050, the correction could continue up to 17,850-17,750. A fresh uptrend is possible only after the 18,050 range breakout and could move up to 18,130-18,200," he said.
Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in underscored Nifty50 appears to have slipped into a consolidation phase, after a steep rally from the lows of 17,422 to 18,114 levels, in just two trading sessions.
However, as long as the Nifty sustains above the bullish gap zone present between 17,791 and 17,703 registered on April 4, any weakness shall be considered as an opportunity to create fresh long positions, Mohammad said.
"Weakness in the index should not be expected unless the Nifty closes below 17,700. Similarly, strength should not be expected unless it closes above 18,115. Once this level is cleared then the rally should extend towards 18,350. Stop-loss level for positional long positions in Nifty should be placed below 17,700," said Mohammad.
"Nifty has managed to close above the 200-day exponential moving average (EMA) indicating a prevailing positive trend. On the higher end, 18,150 may continue to remain an immediate resistance, on the lower end, support is visible at 17,800," said Rupak De, Senior Technical Analyst at LKP Securities.
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