Tech View: Nifty bulls fail to guard 200-DMA. What investors should do on Thursday

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After sinking for the sixth straight session, the Nifty50 not only failed to protect the 17,000 mark but also slipped below its 200-DMA to end 149 points lower near the 16,850 mark on Wednesday.

The index formed a small bodied bearish candle on the daily scale with a long upper shadow, indicating pressure at higher zones.

The momentum oscillator RSI was in a bearish crossover. “The trend is likely to remain weak as long as it remains below the 17,000 level. On the lower end, 16,800-16,830 levels will likely remain key support points. On the higher end, resistance is visible at 17,000,” said Rupak De, Senior Technical Analyst at

.

What should traders do? Here’s what analysts said:

Chandan ,

Till the index remains below the 17,000 zone, weakness may be seen towards 16,666 and 16,500 zones, whereas hurdles are placed at 17,071 and 17,166 zones.

On the options front, maximum call open interest (OI) stood at 17,000-17,200 strike ,while maximum put OI was at 16,500-16,800 strike. Call writing was at 17,000-16,900 strike while minor put writing was at 16,700-16,600 strike. Options data suggests a broader trading range in between 16,500 to 17,100 zones.

Nagaraj Shetti, Technical Research Analyst, Securities

A small negative candle was formed on the daily chart with a long upper shadow. This market action signals the formation of a high wave or Doji-type candle pattern. Normally, such formation after a reasonable weakness calls for a pullback rally from the lows. But the overall market trend is still weak and there is no confirmation of any buying emerging from the lows.

Nifty is now placed at the crucial support of 16,800 levels as per the concept of change in polarity. The said level has been a crucial value area in the past and witnessed significant moves from its supports and its resistances in the past. Having declined down to the support, there is a possibility of a minor pullback rally in the market from near 16,800-16,750 levels in the next 1-2 sessions.

Immediate resistance is placed at 17,000 levels.

Palak Kothari, Senior Technical Analyst, Choice Broking

The daily momentum indicator RSI & MACD are trading at oversold zone, while in hourly chart bullish divergence has been seen which suggests some pullback can come in the near term. The support for Nifty has shifted around 16,700 levels, while on the upside 17,100-17,200 levels may act as an immediate hurdle.

Ajit Mishra, VP – Research, Broking

Markets are not seeing any relief citing feeble global cues and a breakdown of 16,800 in Nifty could further dampen the sentiment. Meanwhile, oversold positions in select index majors may result in a marginal bounce in between. We reiterate our view to focus more on risk management and prefer defensive.

Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services

In the near term, the market is expected to remain under pressure due to global uncertainty. However, mixed trends across sectors would continue to offer stock specific opportunities especially in auto and consumption amid the ongoing festive season.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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