NEW DELHI: Nifty50 on Tuesday staged a strong rebound and formed a Bullish Hammer candle on the daily chart. Analysts said the recovery from near a short-term moving average was encouraging, but a few technical indicators are still negative, suggesting that the index may be vulnerable to selloffs.
Shrikant Chouhan of Kotak Securities said the texture of the sharp reversal formation near the 10-day SMA suggests further uptrend.
“We are of the view that while the short-term trend looks up, uncertain global market conditions could keep Nifty50 within the 17,650-17,450 range. As long as the index trades above the 17,450 level, the pullback rally is likely to continue up to 17,600-17,650. On the flip side, the uptrend would be vulnerable below the 17,430 level,” Chouhan said.
For the day, the index closed at 17,562, up 165.10 points or 0.95 per cent.
Mazhar Mohammad of Chartviewindia.in said even as Nifty50 recoiled smartly from the intraday day low of 17,326, it may still remain vulnerable to selloffs, as Tuesday’s recovery can be owing to oversold levels with a fall from the 17,792-17,326 zone in just three sessions.
“Unless Nifty50 closes above the 17,800 level, more strength shall not be expected. The majority of the technical parameters are either showing negative divergences or are in sell mode. If Nifty closes below the 17,400 level, weakness shall initially extend towards the 17,250 level,” Mohammad said.
Sachin Gupta of Choice Broking said the index sustained above nine-day SMA. He said Nifty has seem a breakout of the Falling Channel formation and showed a positive crossover in Stochastic and RSI on the hourly charts, which supports the upward trend. He sees support for the index at the crucial 17,250 level.
Chandan Taparia of Motilal Oswal Securities said the index needs to hold above 17,500 level for a bounce towards 17,650 and 17,777 levels. He sees support for the index at 17,350 and 1,7272 levels.