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Nifty had a rangebound session on Tuesday, as heavy selling during the last half hour of trade gave strength to the bears.
The 50-share Nifty index, which opened 42 points higher, ended the da y 47 points, or 0.45 per cent, down at 10,301 against the previous close of 10,348.
In this process, the benchmark index formed a black candlestick pattern on the daily chart, which did not result in any major formation in the prevailing market condition.
The black candlestick showed that the closing was lower than the opening level.
Market experts said an unabated deprecation in the rupee and a rise in crude oil prices continued to play as spoilsport.
“The market continues to be grossly oversold on the short-term charts and is sitting on a large amount of shorts.
We expect volatility to remain ingrained in the immediate short term,” said Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory.
Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas, said any potential bounce is likely to be a shallow one.
“Nifty can attempt to retest the lower end of the reverse channel that it had broken recently.
On the higher side, 10,480 and 10,500 levels shall be the key area for the bounce.
On the other hand, breach of the swing low of 10,198 would allow the index to complete the impulse structure without any significant bounce.
Overall, the short-term target on the downside continues to be at 10,016,” he said.
The market is struggling to find a bottom and Monday’s low of 10,198 will be critical going forward.
Fear gauge India VIX fell 1.93 per cent to 19.75.
Overall higher volatility suggests a bear grip, but a cooloff in VIX with a topping-out formation could result in a short-term bottom.
The market is likely to oscillate in a broad range with the 10,198 level expected to act as major support for Nifty.
The market is attempting to form a base, but this formation will not get confirmed until Nifty moves past the 11,400 mark, Vaishnav said.
Bank Nifty formed a small black candle as it tried to hold above the previous day’s opening level, but was unable to hold above the immediate hurdle at 24,750.
“On an immediate basis, Bank Nifty has to cross and hold above 24,750 to extend its bounce towards 25,000 and then 25,250 levels, while on the downside major support is seen at 24,250,” said Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Financial Services.
