NEW DELHI: A promising rally in the Nifty50 came to a grinding halt on Wednesday, threatening to reverse a recovery seen over the past few sessions. The index ended up forming a 'Bearish Engulfing' pattern on the daily chart.
Analysts believe the index might have missed a chance to stage a strong pullback. It may consolidate for now, they said.
“A long-range bear candle has been formed within a high-low range of 273 points. This pattern indicates the formation of a bearish engulfing pattern. The index seems to have formed a lower top at Wednesdays high of 10,709, as per the negative sequence of lower tops and bottoms,” said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
The index reclaimed the 10,700 mark in intraday trade but fell thereafter to settle the session 131.70 points, or 1.24 per cent, lower at 10,453.
Niftys underlying short-term trend seems to have reversed and more weakness could be in store over the next one or two sessions. Next lower level to be watched is at 10,300, Shetti said.
The bears are again pushing the market from higher levels, said Chandan Taparia of Motilal Oswal Securities. “The price setup at the current juncture suggests the index may remain volatile as, after the recovery of 500 points from recent swings lows, it is again finding hurdles in key resistance areas,” the expert said.
The index will not gain strength unless it closes above 10,710, said Mazhar Mohammad of Chartviewindia.in. “If it manages to sustain above 10,436 level on Thursday, we would expect it to consolidate for a couple of sessions and for the bulls to make an attempt to drift it towards 10,700 level,” Mohammad said.
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