Nifty ended flat on May 5, erasing gains of the day as the risk appetite of investors remained low amid worries of high inflation and prospects of more rate cuts that will slow growth going ahead.
Nifty opened at 16,854.75 against the previous close of 16,677.60 and touched intraday high and low of 16,945.70 and 16,651.85, respectively. The index closed 5 points, or 0.03 percent, up at 16,682.65.
Among the sectors, Nifty Realty fell 1.62 percent while the healthcare index fell 0.84 percent. Nifty Bank index slipped 0.09 percent.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities pointed out that after a sharp fall, the Nifty has formed a bearish candle and is also holding a lower top formation on intraday charts, indicating further correction from the current levels.
"As long as the index is trading below 16,850, the correction wave is likely to continue and below the same, the Nifty could touch the level of 16,600-16,500. On the flip side, 16,800 and 16,850 would act as immediate hurdles. Above 16,850, the market could hit the level of 16,950,” said Chouhan.
Rupak De, Senior Technical Analyst at LKP Securities said, the Nifty has formed an inside-day bar on the daily chart, suggesting indecisiveness. The daily RSI is in a bearish crossover. The trend remains weak; at the lower end, support is seen at 16,600, whereas resistance is visible at 16,950-17,000," said De.
Sumeet Bagadia, Executive Director, Choice Broking underscored indicators such as MACD, and RSI still remains on the weak side. The 200-day simple moving average would be acting as resistance in the coming days.
"Even hourly charts suggest no major pullback expected till 16,950 is taken off. Investors and traders are advised to work with option strategies to neutralize the volatility," said Bagadia.
This sell-off from the intraday high is hinting at some kind of nervousness among bulls. However, defending the last Thursday’s low of 16,623 is slightly positive for bulls. Hence, if they manage to hold this level for the next couple of sessions then it can pave the way for sideways consolidation, between 16623 and 17132 levels, said Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in.
"In the case of breaching 16,623 levels, then initially it should slide down into the zone of 16,447 – 16,418. For the time being, traders are advised to remain neutral on the index but shorting can be considered on breach of 16,623," said Mohammad.
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