Despite the index being in the oversold zone as suggested by the 27-day 14-day RSI reading, analysts say the trend remains broadly negative and the index may retest low-swing sooner than 15,670.
For the day, the index fell 359 points, or 2.22 percent, to 15,808.
The bears seem to be in complete control, says Mazhar Mohammad, Mazhar Mohammad, founder and chief market strategist at Chart View India.
“The indicator has registered a new corrective swing on the basis of completion. Therefore, it is important for bulls to maintain the low of 15,671 level registered in March. Meanwhile, the uptrend cannot be expected unless the index is consolidated for a few sessions, “he said.
Nagraj Shetty, technical research analyst at HDFC Securities, said the short-term trend of the Nifty50 continues to be negative and is likely to weaken further towards the 15,670 level.
“One can expect a bad side breakout in the next session. The Nifty 50 has a high probability of reversing to a low near the 15,500 level. Confirmation of the reversal pattern could open a reverse bounce in the market,” he said.
“The previous swing low of 15,670 is not too far away, and it will be a matter of time to re-examine. Although the market has been in the oversold zone for some time, further correction may be disrupted. -300-odd points will bring down the possibility. At the upper end, the 16,000-16,050 zone is expected to act as an immediate deterrent, “said Osho, a farmer in Angel One.
As far as Nifty Bank is concerned, Chandan Taparia of Motilal Oswal Securities says the index has created an inside bar and a bearish candle on a daily scale.
Until the index falls below 35,500, Taparia expects further weakness towards the 35,000 and 34,750 zones.
“The resistance levels of the index are kept at 35,750 and 36,000 zones,” he said.