NEW DELHI: After rising to a level just 2 per cent short of reclaiming its record high, the Nifty50 made a U-turn on Tuesday and reversed the entire morning gains to close in the red. The index formed a candlestick pattern similar to the Gravestone Doji on the daily chart, suggesting strong resistance at higher levels.
The index fell 4.75 points, or 0.04 per cent, to close at 10,801. It rose 122 points in intraday trade, but then tanked amid concerns over the likelihood that an INC-JD(S) alliance would pip the BJP to power in Karnataka after a fractured election verdict that yielded no majority winner.
At the day’s high point of 10,929, the index was just 2.21 per cent away from hitting a record high of 11,171. “The index saw profit booking exactly at its logical resistance point of 10,928. Tuesday’s high has the potentiality to become a short-term top, if the level is not cleared in the next couple of sessions. The Nifty50 may remain under pressure on Wednesday. If it breaches the 10,781 level, then it initially slip towards 10,713 and eventually below 10,601 to culminate the corrective pattern,” said Mazhar Mohammad of Chartviewindia.in.
Analysts said given the poor market breadth, traders may wait for a proper correction before initiating fresh long positions.
The daily price movement has taken the shape of a bearish “Gravestone Doji” reversal candlestick pattern, said Rajesh Palviya, Head Technical & Derivatives Analyst at Axis Securities.
“However, a break below the low point of the previous session (10,780) will confirm the above-said pattern and the profit booking may extend the index further towards 10,730 and 10,700 levels. The 10,840-10,850 zone will remain an immediate hurdle. Any sustainable move above this range would take the index towards the 10,900-10,920 range,” Palviya said.
The index, meanwhile, has formed higher lows for the seventh consecutive session. “It has to hold above 10,785 level to extend its move towards 10,888 while on the downside supports are seen at 10,725 and 10,680 levels,” said Chandan Taparia of Motilal Oswal Securities.