To be sure, Nifty50 had made a ‘Death Cross’ in the previous session, which was a negative development. To add to that the index could not respect a key support of 17,000 level on Tuesday, which intensified the selling pressure. Analysts said more downside is likely for the index.
“The overall chart pattern of Nifty50 indicates a decisive down trend. A move below the support of 16800 levels could open the door down to lower 16,200-16,000 levels in the near term. Any pull back rally could find resistance around 17100 levels,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan said despite multiple attempts during the day, the index failed to cross the 20-hour MA as well as the 40-day EMA.
“These moving averages induced the bears into action thus resulting in a sharp fall towards the end of the session. Consequently, the Nifty50 has breached the 200-DMA and the level of 17000 on a closing basis. The overall structure suggests that the selling pressure can continue going ahead. Thus the index is expected to tumble further towards 16,500-16,400 in the short term. On the flip side, Tuesday’s high of 17,275 will now act as a crucial short term barrier,” Ratnaparkhi said.
For the day, the index closed at 16,958.65, down 215 points or 1.25 per cent.
Mazhar Mohammad of Chartviewindia.in said a late sell-off from around 17,230 levels seems to have tilted the tide decisively in favour of the bears.
“In this process, the Nifty50 breached its critical support to settle below the 200-day moving average. However, at an intraday low of 16824 levels, the said index tested the 200-day EMA and bounced back. It thus remains critical for the index to sustain above 16,820, as a breach of this can drag it down further towards 16,500 level,” he said.