Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing a choppy movement in the last couple of sessions, Nifty witnessed massive sell off on Thursday and closed the day lower by 331 points. Nifty opened today with an upside gap of 140 points, the market made an attempt to move up soon after the opening. It started to show weakness from the highs from the early part and the selling pressure got strengthened later and that continued for the whole session. The opening upside gap has been filled completely and the Nifty closed near the lows.
A long bear candle was formed on the daily chart after opening higher (long bear candle within a high low range of around 520 points). This candle has broken decisively below the important support band of 15700-15600 levels and closed lower. This downside breakout of the support could hint more downside for the market ahead and any upside bounce from here could be a sell on rise opportunity.
The long term support of 20m EMA as per monthly timeframe chart has been broken on the downside at 15700 levels in this month, which was holding since past 3-4 months. This is not a good sign for the market ahead.
Conclusion: The sharp weakness of Thursday below the crucial support (15600) indicate significant downside breakout in the market. One may expect Nifty to slide down to the next lows of around 15000-14800 in the near term. Any upside bounce from here could be a sell on rise opportunity.