Nifty ended in the red on May 6, ending the week in the negative territory as investors sold off equities amid a sharp rise in US dollar, and crude oil prices amid concerns that more aggressive rate hikes are in the offing.
Nifty opened at 16,415.55 against the previous close of 16,682.65 and touched intraday high and low of 16,484.20 and 16,340.90 respectively. The index closed 271 points, or 1.63 percent, lower at 16,411.25.
Among the sectors, Nifty Realty with a loss of 3.56 percent, emerged as the top laggard, followed by financial services, IT, metal, private bank and consumer durables indices, all falling more than 2 percent.
Nifty formed a bearish candlestick pattern on the weekly chart for the fourth consecutive week which indicates selling pressure. Palak Kothari, a research associate at Choice Broking underscored that the index has given closing below the 61.80 percent retracement level of its previous up move from 15,671 to 18,115 level which suggests more selling in upcoming sessions.
"The index has been trading below the neckline of the 'Head & Shoulder' pattern which is a sign of bearishness in the counter. Momentum indicators 'stochastic' are trading with negative crossover on daily charts which indicates downside movement can be seen. Nifty may find support around 16,300 while on the upside, 16,600 may act as an immediate hurdle for the index," said Kothari.
Nifty has been trading below 200-day and 50-day simple moving averages (SMAs) which is broadly negative.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities, observed the index has been consistently holding a lower top formation on the intraday charts that supports short-term weakness.
"For the traders, 16,300 would be the key support level. However, a quick intraday pullback rally is not ruled out if the index succeeds to trade above 16,300. Above the same, the pullback rally could continue up to 16,550-16,700. Below 16,300, selling pressure is likely to intensify, and below the same, the Nifty could touch the level of 16,150-16,000,” said Athawale.
Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in, said remaining below 16,400, the next logical target for the index is around 16,150. In between, any pullback attempt may perish around 16,650 unless the
index registers a strong close above Friday’s bearish gap zone present between 16,484 and 16,651 levels. As the trend is clearly on the downside, strength can be an opportunity to create fresh short positions, said Mohammad.
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