NEW DELHI: The Nifty50 took a sharp cut on Thursday and settled the November F&O series at the 10,227 level. For a good part of the week, the 10,240 level was providing a major support to the index. But it closed below the crucial support on Thursday. This may trigger further correction in the index.
For the day, the index formed a Bearish Belt Hold pattern on the daily chart. Such a pattern is formed when the opening price becomes the highest point of the session (intraday high) – which means there was no upper shadow and declines could be seen all through the day – forming a large body and a small lower shadow.
“The Nifty50 formed a Bearish Belt Hold candle and corrected around 150 points. It continued its weakness for the third consecutive session and corrected towards 10,200. If it sustains below 10,300, short-term weakness could be seen towards 10,178 and a swing low of 10,094. The index could see the immediate hurdle at 10,250,” Chandan Taparia of Motilal Oswal Securities said.
The opening at 10,332 proved to be the highest point for the Nifty50, which eventually fell 134 points, or 1.30 per cent, to close at 10,226. The index has settled below the 20-day moving average and was on the verge of breaching its 50-day moving average.
“The pace with which the Nifty50 has fallen suggests the trajectory of the index might have changed its course to the downside. Thursday’s move has erased gains of last seven sessions, which the bulls added laboriously after a gapup opening on November 17. In such a scenario, if the fall continues, then it should take the indices below 10,094 level to complete the corrective pattern,” said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in.
That said, if the fall has more to do with the F&O expiry and the market recovers on Friday without much downside, the bulls are likely to be in a position to recover lost ground.