The Nifty50 opened the week sharply lower and remained under pressure throughout the session on March 30, following weak global cues. Fast-spreading COVID-19 in the United States and Europe, and IMF Chief's warning of global recession dented market sentiment.
The sharp selling in banking & financials, auto and IT stocks dragged the Nifty index below 8,300, and formed a small bearish candle on daily charts as closing was lower than the opening.
Experts feel 7,800 could remain a crucial level and till it holds the same, buying can emerge at lower levels.
Traders are advised to wait for further clues to emerge over the next 2- 3 trading sessions before initiating trading bets in any of the directions.
The Nifty50 opened lower at 8,385.95 and extended selling pressure in the afternoon to hit a day's low of 8,244. The index fell 379.15 points or 4.38 percent to close at 8,281.10.
"Albeit it is too early to conclude that Nifty50 has resumed its downtrend, for time being it will be safe to presume that the index is retracing the last leg of the rally from the lows of 7,511 – 9,038 levels perhaps owing to profit-booking," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
According to him, if some sort of short term uptrend is in place from recent lows of 7,511 then the current downswing from the highs of 9,038 shall not go below 7,816 levels in the ideal scenario. "And in case 7,800 is violated on a closing basis then one should prepare for breach of the recent bottom of 7,511 levels."
He said as long as Nifty sustains above 7,800 levels then one can remain hopeful of buying to emerge at lower levels which should eventually resume the pull back on the upside. "In this regard, a close above 8,660 shall be considered as an initial sign of strength and on such a close upswing shall again resume."
The Nifty Bank also behaved like benchmark Nifty50 and fell 5.94 percent to close at 18,782.40. The index has fallen for than the benchmark and formed a bearish candle on daily charts.
"Nifty Bank has broken good support of 19,000 which will act as resistance now for coming sessions, while support is near 18,250-17,800 zone," Rohit Singre, Senior Technical Analyst at LKP Securities told Moneycontrol.