Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing range bound action in the last four sessions, Nifty witnessed sharp weakness on Wednesday and closed the day lower by 226 points. After opening with a weak note, the market displayed steep weakness in the early to mid part of the session. It later showed minor upside recovery attempt in the afternoon to later part of the session.
A long negative candle was formed on the daily chart, which indicates a downside breakout of the sideways range movement in the market. Presently, Nifty is placed at the crucial support of previous swing lows around 17780-17800 levels. Hence, previously, we have seen decent upside bounces from this support. As long as this support holds, the chances of pullback rally exists.
The recent upside breakout of triangle pattern has been negated with Nifty reaching the lower end of triangle at 17800 levels on Wednesday. This is not a good sign, as the weakness could be intensified on the move below 17750 levels.
Conclusion: The short term trend of Nifty has turned negative. Having placed at the important support, minor pullback rally is expected in the short term. But, the overall chart pattern indicates the higher possibility of decisive downside breakout at 17750 levels in the near term. Such anticipated market action is likely to bring steep weakness for the market ahead.