For the day, the index formed a big red candlestick on the daily chart, as it erased the gains of last 11 session.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities, said ever since Nifty formed a higher bottom at 12,790 on November 26, it has never formed any decisive candlestick pattern on a daily basis, and continued to show indecisiveness.
“The same indecisiveness finally resulted in Monday’s vertical fall. It’s a bearish reversal formation for the short term. Nifty could slide to either 13,000 level, where it has support as per options data or 12,500, which was the highest point of the previous bounce (all-time highest levels on Nifty till January 2020),” Chouhan said, adding that on the higher side, the 13,400-13,500 zone would be hurdle to watch.
For the day, Nifty closed 432 points lower at 13,328.
ETMarkets.comMazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in, said the bears appeared to have established an upper hand with a Long Black Day kind of formation, as Nifty witnessed a sharp intraday cut of 646 points.
While on the face of it, this appears to be a trend-changing fall for the near term, Mohammed said Nifty behaviour in the recent past appears to be giving a different narrative as such bigger single-day corrections in August, October, and November failed to attract follow-through selling.
“At this point in time, more evidence is required to confirm such a trend reversal in favour of the bears,” he said.
Check out the candlestick formations in the latest trading sessions
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It is time for traders to be cautious, warned analysts.
Ajit Mishra, VP – Research at Religare Broking, said traders should avoid naked leveraged trade in the futures segment and prefer option strategies until the market stabilises.
