Closing Bell: Nifty ends below 16,200, Sensex pares losses to close 276 pts lower; banks shine, IT, auto drag

The Nifty has formed a Hammer Kind of candlestick pattern on a daily chart which indicates value buying from lower levels. Moreover, Nifty has taken support from the lower band of Bollinger on a Four- hourly chart which is a sign of short-term reversal in the counter.

However, the momentum indicators RSI bounced from oversold zone as well as divergence has been seen on an hourly chart which indicates bounce back momentum.

The Nifty may find support around 16000 levels, while on the upside 16400 may act as an immediate hurdle for the Nifty and crossing above the same can attract fresh buying. On the other hand, Bank Nifty has support at 33800 levels while resistance at 35500 levels.

Investors continue to remain wary despite global markets trading in green due to drop in domestic investors confidence & FII selling.
The market turned volatile waiting for the release of April US inflation data, which is expected to cool down marginally. Inflation will continue to be elevated but the chance of major reactions is low because it has been factored in by the markets.

The major determinant for market direction would be the pace of decline in inflation in response to the Fed measures.

Markets displayed volatility but moved in a range before ending lower, as investors pruned their holding in IT, telecom & automobile stocks. Lack of fresh positive cues is forcing investors to dump equities and switch to safer havens like gold, etc.

Although, the larger texture of the market is still on the bearish side, we could see a sharp pullback rally in the near future due to markets being in an oversold territory.

For the traders, 16000 would act as a sacrosanct support level and above the same a pullback rally is likely to continue up to 16300-16400 levels. On the flip side, dismissal of 16000 could increase further weakness up to 15940-15900.

Nifty recovered smartly from the day's low before closing with a marginal loss. On the lower end, it found support at 16000 as it closed at 175 points off the day's low.

On the daily chart, a large lower wick indicates buying at the lower level. On the higher end, the Nifty is likely to move towards 16400. On the lower end, support is seen at 16100/15950.

The Bank Nifty index witnessed a smart recovery from the lower levels. The index however needs to close above the level of 35000 for resuming the move towards the levels of 36000.

The downside support stands at the 34200-34000 zone and a break below this will only lead to a fresh round of selling. The momentum oscillators are already in oversold territory and a minor pullback cannot be ruled

Indian rupee ended 9 paise higher at 77.23 per dollar against Tuesday's close of 77.32.

Indices displayed extreme volatility today ahead of the CPI & IIP data this week. While we did see a sharp recovery in Indices during afternoon trade, the market breadth was very weak with several stocks in the broader market taking a big knock-on selling pressure as the Small-Cap Index lost 3%.

Indian benchmark indices ended lower for the fourth straight session with Nifty closing below 16,200.

At Close, the Sensex was down 276.46 points or 0.51% at 54,088.39, and the Nifty was down 72.90 points or 0.45% at 16167.10. About 787 shares have advanced, 2531 shares declined, and 116 shares are unchanged.

Shree Cements, Bajaj Finserv, Larsen and Toubro, Bajaj Finance and NTPC were among the top Nifty losers, while gainers included ONGC, Axis Bank, IndusInd Bank, Cipla and HDFC.

Among sectors, bank and realty indices were up 0.5 percent each, while IT, auto, FMCG, pharma, power and capital goods indices shed 0.5-1 percent.

BSE midcap index shed 0.4 percent and smallcap index fell 2.2 percent