Bulls take a breather, but traders don't rule out short covering

Profit booking pulled down the market benchmark indices mostly led by metal, banking and auto stocks with Nifty Metal closing 0.92 percent down. Nifty Bank was down 0.70 percent and Nifty Auto fell 0.73 percent. Stocks swung between gains and losses as investors weighed declining coronavirus infections in the nation against the impact of global inflationary pressures, however stock specific action continued and action shifted from large cap to mid and small cap counters.

Short covering may not be ruled out ahead of Nifty and Bank weekly expiry tomorrow, said Mohit Nigam, Head-PMS, Hem Securities. Realty stocks like Oberoi Realty and Godrej Properties were positive on hope that demand will be back after pandemic cases fell to below 1,000 in the financial capital --Mumbai.

At close of trading on Wednesday (May 19) the Sensex was down 290.69 points or 0.58 percent at 49,902.64. The Nifty was down 77.90 points or 0.52 percent at 15,030.20.

Many stocks declined sharply during the lockdown period and can see positive momentum in case of lifting lockdown. Immediate support is intact at 14,800 and closing above 15,000 is positive for fresh highs for Nifty 50, Nigam added.

Sumeet Bagadia, Executive Director, Choice

Broking said, "technically, the Nifty index has faced resistance from the upper band of Bollinger, which indicates downside movement for the upcoming session. Moreover, the recent candle also formed like a Shooting Star Candlestick on the daily chart, which is a sign of some correction.

Hourly Oscillator Stochastic has indicated negative crossover, which supports the short-term correction in the nearterm. At present, the Nifty index is holding support at 14,940 levels while an upside resistance seems at 15,200 levels," he added.

The Nifty has formed a classic inverted hammer after hitting a major level at 15,140, said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.

"It can be either bearish or bullish continuation for the market. If the market falls below 14980, the chances of hitting 14900/14850 levels would be brighter. On the other hand, the refusal to come down to the level of 14980 would be positive for the market," he said. Resistance would be at 15150 and 15250 levels.

Technically, we feel this is a temporary break that the market has taken after rallying for 700 points. After completing the corrective consolidation, we could see upward move in the market, Chouhan added.