Analyst advise traders to book profits on any bounce towards 10,900 and a move below 10780 would provide weight to this stance.
The market is likely to open sharply lower on Wednesday, tracking global weakness. The Nifty50 closed down 4.70 points at 10,801.90 on Tuesday.
The SGX Nifty futures also indicated weak opening for the market as it was trading down 67.50 points at 10,758 on the Singaporean Stock Exchange.
Meanwhile, early indications suggest a strong lead for BJP, just short of absolute majority, in Karnataka Assembly elections. Though the BJP dramatically improved its performance from the last elections, reports that the Congress was ready to provide support to the JDS, the indices slipped.
The impact of election will neutralise in a couple of days but market will take cues from this victory and expect similar result in the General Elections of 2019. Stability in government is what the stock market is seeking.
In the last couple of days lot of selling pressure has been observed in midcaps and small caps and it will be continuing to underperform in the market.
Analyst advise traders to book profits on any bounce towards 10,900 and a move below 10,780 would provide weight to this stance. Level of 10,840 followed by 10,880 would act as strong hurdles. Any attempt to bounce back towards these levels can be used as an exit opportunity.
Early trends indicate that Congress might be back the JD(S) in forming the government. A hung parliament will be something which might not go well with markets, use sell on rallies as a strategy till we cross 10,930 on closing basis.
On the global front, most Asian stocks traded lower following a down day for Wall Street as the US 10-year Treasury yield rose to 3.09 percent overnight.
US stocks dropped sharply on Tuesday after Home Depot reported quarterly sales that fell short of Wall Street's expectations and interest rates breached new highs, reports CNBC.
The Dow Jones industrial average fell 193 points to close at 24,706.41 while the S&P 500 declined 0.7 percent to 2,711.45 and the Nasdaq composite dropped 0.8 percent to 7,351.63.
For more, watch the Markets@Moneycontrol show as Moneycontrol Editor Santosh Nair talks to Anchal Pathak about the latest market trends to watch out for today.