New Delhi: The Nifty on Wednesday reclaimed the 10,700 level despite three of five index stocks losing out. The index formed a Shooting Star candle on the daily chart, suggesting selling pressure at higher levels.
The NSE barometer failed to close above its 200-day moving average despite breaching it intraday. The index is now expected to see resistance in 10,740-10,775 zone, while a drop below the 10,695 level may trigger selloff. Already, only a few sectors such as IT and banking have held up the index in the last three days.
“The short-term trend of Nifty is positive, but the inherent strength is lacking at the highs, as the overall market breadth is not supporting current upmove,” said Nagaraj Shetti of HDFC Securities.
The index needs to get out of 10,489-10,774 range that it has been trading in for last 10 trading sessions. Only a decisive range breakout above the 10,774 zone will commence the next move, said Chandan Taparia of Motilal Oswal Securities.
For the day, the index rose 43.25 points, or 0.40 per cent, to 10,728.85, thanks to firm trend in banking and IT names. The resistance zone of 10,750-10,775 coincides with the bearish gap area of 10,843-10,754 formed on October 4, said Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities, who sees momentum to reverse if the index falls below 10,700.
Mazhar Mohammad of Chartviewindia.in even sees a case for selloff if the index Nifty50 closes below this level. The expert advised traders to stay away from creating fresh longs until a sustainable breakout is registered above the 10,774 level.