Nifty50 Forms ‘Short Bear­ish’ Can­dle; Sup­port Likely at 8,741

The Economic Times - - Money -

timesin­ter­net.in New Delhi: The Nifty50 snapped a four-day win­ning streak on Tues­day to form a ‘short bear­ish’ can­dle­stick pat­tern on the daily chart, sig­nalling con­fu­sion among traders as they geared up for the out­come of the Re­serve Bank of In­dia’s (RBI) two­day pol­icy re­view on Wed­nes­day.

The 14-day rel­a­tive strength in­dex still hov­ered in the over­bought ter­ri­tory, but the down­side looked capped. The in­dex is ex­pected to see sup­port around its Tues­day’s low of 8,741, while the im­me­di­ate re­sis­tance is seen at the 8,820 level. To con­firm any trend re­ver­sal, the in­dex needs to break be­low the 8,700 level on a clos­ing ba­sis. The 50-pack in­dex tum­bled as soon as it opened on a neg­a­tive note.

The NSE barom­e­ter kept fall­ing be­fore it found some sup­port near its five-day ex­po­nen­tial mov­ing av­er­age (EMA) at 8,740. The in­dex re­couped losses to­wards the end of the ses­sion to even­tu­ally set­tle at 8,768, down 32.75 points, or 0.37%.

“The bulls are ex­hausted af­ter a 1,000-point rally from the De­cem­ber lows. A short-term cor­rec­tion can­not be ruled out,” said Mustafa Nadeem, CEO, Epic Re­search.

Sameet Cha­van, Chief An­a­lyst for Tech­ni­cals & De­riv­a­tives, An­gel Broking, said Tues­day’s low of 8,741 would be seen as a key sup­port level in the forth­com­ing ses­sion as a sus­tain­able move be­low it may lead to fur­ther in­tra­day cor­rec­tion to­wards the 8,707-8,685 re­gion.

“On the flip­side, 8,820 would act as an im­me­di­ate hur­dle and sur­pass­ing this point would ex­tend the rally to­wards the next mile­stone at 8,900. De­spite a small dip, we would in­ter­pret this as a part of the con­sol­i­da­tion phase and, hence, traders should keep fol­low­ing stock-cen­tric ap­proach with a pos­i­tive bias,” Cha­van said.

Ku­nal Bothra, in­de­pen­dent mar­ket an­a­lyst, be­lieves since the Nifty50 has re­spected the 8,741 level, it might see a de­cent up­trend over the next cou­ple of days. “If the in­dices open softer again on Wed­nes­day, one should prob­a­bly take it as an op­por­tu­nity to buy,” Bothra told ETNow. Dr CK Narayan, Founder, Chart Ad­vise, noted that the move­ment from open­ing to close has been very limited in the past few ses­sions, which has led to for­ma­tion of small body can­dles on the daily chart.

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