The Indian market benchmarks took a breather after the recent rebound and ended almost flat on March 11.
After the flat start, the benchmark Nifty50 hovered in a narrow range till the end, eventually closing at 16,630.45, up 36 points, or 0.21 percent. Sensex ended 86 points, or 0.15 percent, higher at 55,550.30 and both key indices extended their gains into the fourth consecutive session.
Nifty50 appears to be in a consolidation mode, after almost a 1000 point rally from the intra-week low of 15,671 which resulted in a strong bullish engulfing kind of formation on weekly charts, said Mazhar Mohammad, Founder & Chief Market Strategist, chartviewindia.in.
In the last two trading sessions, Nifty tested the 200-day exponential moving average before kicking in the consolidation phase.
Going forward it remains critical for this counter to sustain above the bullish gap zone present between 16,447 – 16,418 levels, Mohammad added.
He believes sustaining above this bullish gap zone, bulls will make one more attempt to get past critical hurdles present in the zone of 16,700 – 16,800.
"Once Nifty manages to close above 16,800 then a breakout on the upsides will be confirmed which may hint at a bottom in place at recent lows of 15,671. In that scenario, a sustainable rally can be expected with an initialtarget of 17,025 levels. Contrary to this, a close below 16,400 can sharpen the profit booking. Therefore, if some positional trader is long then they are advised to place a stop below 16,400, said Mohammad.
As per Prashanth Tapse, Vice President (Research), Mehta Equities, Nifty’s price-action shows an interesting setup that forecasts the possibility of a massive move in both directions. However, considering the macroeconomic, behavioural, and sentimental evidence, Nifty can drop towards 16,000 mark again. The probability of a down move appears more probable, confirmation only below Nifty’s 16327 mark, said Tapse.
The key concern for investors is that Nifty is still trading below the 20-day simple moving average (SMA) and maintains a lower top formation on daily charts.
"We are of the view that the index has completed one leg of a pullback rally, but the texture of the market suggests a strong possibility of a range-bound activity in the near future. For traders, 16,400 and 16,300 would be the key support areas and 20-day SMA or 16,800 would act as an immediate hurdle for the bulls. A close above the same could see Nifty hitting 17,000 or 200-day SMA," said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities.
Athawale believes the uptrend formation will continue unless Nifty slips below 16,300.
