Analysts said the index was forming indecisive candles for some time and hinting at a loss of momentum. Wednesday’s fall sent the NSE barometer below its immediate support at 15,680, suggesting weakness ahead, said analysts, who believe the 15,700-800 range will now be a key hurdle for the index going forward.
For the day, Nifty closed at 15,635, down 104 points or 0.67 per cent.
“The index had been forming back-to-back Hanging Man patterns after a sustained rally, which was hinting at a weakening uptrend. Going forward, if the bulls fail to take Nifty50 beyond the 15,700 level, bouts of fresh selling may drag it towards the 15,500-15,450 range. The RSI has turned southward from the cluster of previous peaks, suggesting weakening upward momentum,” said Aditya Agarwala of YES Securities.
During the day, Nifty stumbled at the 15,800 level and filled the gap in the 15,597-15,611 zone, which was created recently on the daily chart.
“The short-term momentum indicators continued to show further weakness, suggesting consolidation ahead. On the downside, the swing low of 15,460 will be a key support whereas Wednesday’s high of 15,800 will now act as a crucial short-term barrier,” said Gaurav Ratnaparkhi of Sharekhan.
Independent analyst Manish Shah said the way Nifty50 behaved in the latter part of the day suggests one must take precautions and cut some open trades. The long bearish candle, he said, was wider than the candles of the last several sessions, which made him believe that sellers were in control now.
“Markets do not move in a straight line; they oscillate. Nifty50 may see a decline towards the 15,200 level and stabilise at lower levels. The undercurrent is strong and Nifty50 should bounce once selling is done. On the upside, Nifty50 needs to break above 15,770 level for the rally to take the index to higher levels,” he said.