Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing high volatility with range-bound action on Tuesday, Nifty continued its weakness on Wednesday and closed the day lower by 148 points. After opening on a negative note, the market showed a sustainable intraday upside bounce in the early-mid part of the session. It failed to sustain the highs of 17k levels and slipped into weakness in the later half and closed near the lows.
A small negative candle was formed on the daily chart with a long upper shadow. This market action signals the formation of a high wave or Doji-type candle pattern. Normally, such formation after a reasonable weakness calls for a pullback rally from the lows. But the overall market trend is still weak and there is no confirmation of any buying emerging from the lows.
Nifty is now placed at the crucial support of 16800 levels as per the concept of change in polarity. The said level has been a crucial value area in the past and has witnessed significant moves from its supports and its resistances in the past. Having declined down to the support, there is a possibility of a minor pullback rally in the market from near 16800-16750 levels in the next 1-2 sessions. Immediate resistance is placed at 17000 levels.