Concerns over prolonged and soaring inflation spooked investors as the market benchmark Nifty50 cracked nearly 3 percent on May 19.
Nifty opened at 15,917.40 against the previous close of 16,240.30 and touched intraday high and low of 15,984.75 and 15,775.20 respectively.
The index eventually closed 431 points, or 2.65 percent, lower at 15,809.40 with 47 stocks in the red and only three- ITC, Dr Reddy's and Power Grid - in the green.
All sectoral indices ended in the red with Nifty IT falling 5.74 percent and the metal pack falling 4.08 percent. Barring Nifty FMCG (down 0.65 percent), all sectoral indices fell more than 2 percent.
Nifty formed a bearish candle which indicates further weakness from the current levels.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said that the index is trading near the 15,700-15,750 support level, hence a quick pullback rally is not ruled out if the index succeeds to trade above 15,700.
"For traders, as long as the index is trading below 15,900, the correction wave is likely to continue and below the same, it could retest the level of 15,700. On the further downside, the index could slip to 15,600. On the flip side, above 15,900, the Nifty could move up to 16,000-16,100 levels,” said Chouhan.
Palak Kothari, Research Associate of Choice Broking pointed out Nifty is facing support from horizontal line i.e., 15,750 which is ‘make or break’ level. In addition, Nifty has been sustained above the 21-month moving average which indicates a bounce back from lower levels can be seen.
"However, the momentum indicators MACD and Stochastic were trading with a negative crossover and trading in an oversold zone which is a sign of sideways to negative trend in Nifty. The Nifty may find Strong support around 15,700, breaching below it can show more downside till 15,500 while on the upside 16,000 may act as an immediate hurdle," said Kothari.
Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in underscored if the index slips below 15,670 in the next session, then the slide shall initially continue towards 15,400 but the new downside target will remain at 15,041.
"Nevertheless, as some technical oscillators on the weekly charts reached a deeply oversold zone a sideways consolidation cannot be overruled. For time being trade is decisively in favour of bears and hence bulls are advised to confine themselves to the fences," said Mohammad.
Disclaimer: The views and recommendations made above are those of individual analysts or broking firms and not of MintGenie.