Equity benchmark Nifty50 fell by a percent on March 21 as investors took money off the table from some bluechip stocks such as ICICI Bank, Kotak Mahindra Bank, TCS, HDFC and Hindustan Unilever.
Nifty witnessed profit booking as traders started booking profit as the benchmark approached a key resistance level. The index finished at 17,117.60, down 169 points, or 0.98 percent and formed a bearish engulfing kind of formation. A bearish engulfing candlestick pattern is a bearish reversal pattern that indicates a bearish reversal of trend after confirmation.
"Nifty50 appears to have come under profit booking after a sharp rally of eight trading sessions from the lows of 15,671 as it registered a bearish engulfing kind of formation," said Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in.
"However, downsides seem to be limited at this point in time as strong support is placed around 17,000 level in the form of 200-day simple moving average (SMA). Moreover, a large bullish gap zone is present between 17,175 and 16,987 level registered on March 17," Mohammad added.
"Hence, unless Nifty closes below 16,987, bears will not gain upper hand. In between Nifty may consolidate in a range of 17,350 – 17,000. Meanwhile, upside strength shall not resume unless Nifty closes above 17,350 and on such a close, it can head towards the 17,800 –17,900 zone," he said.
As the near-term momentum is favouring bulls, Mohammad advised positional traders with high risk-taking ability should look to buy the dip with a stop below 16,890 level.
As per Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, Nifty faced resistance near 50-day SMA and reversed sharply. It also formed a bearish candle on daily charts which support further weakness. However, the medium-term texture of the market is still on the positive side.
"We are of the view that the 50-day SMA or 17,250 would act as an immediate hurdle for the bulls. Below which the correction wave is likely to continue till 17,000-16,975. A fresh uptrend is possible only after 17,250 breakout. Above which the chances of hitting 17,350-17,400 would turn bright. Contra traders can take a long bet near 16,975 with 16,950 support stop loss,” said Chouhan.
Vijay Dhanotiya, Lead -Technical Research at CapitalVia Global Research, believes the short-term technical condition of the market shows that the expected range of the market is likely to be between 17,000 and 17,400.
"While it is subject to further price action evolution, market research suggests it is prudent to wait for a decisive breakout above 17,400 and technical factors to improve before going long in the market. Technical indicators suggest a volatile movement in the market," said Dhanotiya.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
