Even as the index is in oversold territory, as suggested by the 14-day RSI reading of 27, analysts said the trend broadly stays negative and the index could retest a swing low of 15,670 sooner than later.
For the day, the index closed at 15,808, down 359 points or 2.22 per cent.
The bears seem to be in complete control, said Mazhar Mohammad, Mazhar Mohammad, Founder & Chief Market Strategist at Chart View India.
“The index has registered a new corrective swing low on a closing basis. Hence, going forward, it remains critical for bulls to defend the low of 15,671 level registered in March. In case it settles below 15,671, eventually, the weakness shall extend towards a logical target of 15,041 level. Meanwhile, upsides cannot be expected unless the index consolidates for a couple of sessions,” he said.
Nagaraj Shetti, Technical Research Analyst at HDFC Securities said the short term trend for Nifty50 continues to be negative and there is a possibility of further weakness towards the 15,670 level.
“One may expect a downside breakout of it in the coming sessions. There is a higher possibility of Nifty50 forming a lower bottom reversal around 15,500 levels. Confirmation of the reversal pattern could open upside bounce in the market,” he said.
“The previous swing low of 15,670 is not far away, and it would be a matter of time to retest the same. Though the market is in the oversold region for quite some time, a further correction could be disruptive. For the time being, any breach below the 15,670-odd zone would bring the possibility for the index to shed another 200-300-odd points in the near period. On the higher end, the 16,000-16,050 zone is expected to act as immediate resistance,” said Osho Krishan of Angel One.
As far as Nifty Bank is concerned, Chandan Taparia of Motilal Oswal Securities said the index has formed an Inside Bar and a Bearish candle on the daily scale.
Till the index holds below 35,500, Taparia expects further weakness could be seen towards 35,000 and 34,750 zones.
“Resistance levels for the index are placed at 35,750 and 36,000 zones,” he said.