The Nifty extended losses for a second consecutive session on May 9 but did recover 150 points from the day's low, with the index settling 109 points down at 16,302 down.
The index formed a Spinning Top pattern on the daily charts, indicating indecisiveness among bulls and bears.
After falling more than 4.5 percent from last week and 80 percent retracement of the last leg of the rally indicated that there could be some recovery in the coming days that could take the index to 16,500-16,600, experts said.
A spinning top is often regarded as a neutral pattern that suggests indecisiveness in the market. It can be formed in an uptrend as well as a downtrend.
Also read: Taking Stock | Market ends lower amid volatility; power, metal, PSU banks take a beating
"Bears continued their domination over the bourses as the Nifty50 once again witnessed a gap down opening before signing off the session, with an indecisive formation which resembles a Spinning Top," Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia, said.
There, however, is a slight hope of recovery, as the index at a low of 16,142, retraced around 80 percent of the last leg of the rally from the lows of 15,671–18,114.
"If it materialises, this pullback shall attempt to bridge the bearish gap present between 16,484 and 16,651 levels, registered on the last 6th of May," he said.
Traders sitting in short positions they will be better off by covering them, whereas some stability may offer an opportunity to play for a pullback move on the long side, Mohammad said.
The options data indicated that the Nifty could remain in a wider trading range of 16,000 to 16,800 in the coming sessions.
Maximum Call open interest was seen at 17,000 strike followed by 17,500 strike, while maximum Put open interest was seen at 16,500 strike then 16,000 strike.
Marginal Call writing was witnessed at 16,300 strike then 16,800 strike, while Put writing was seen at 16,200 strike then 15,900 strike.
Also read: Gainers & Losers: 10 stocks that moved the most on May 9
Volatility increased further and climbed above 22, which experts feel could bring more swings in the market. India VIX was up by 3.68 percent to 22.03 levels.
Banking index
The Bank Nifty opened negative at 34,092 and after recovery in the initial half of the session, it remained volatile within a broader trading range. It formed a small-bodied bullish candle on the daily scale and trending lower on the daily frame. The index fell 316 points to 34,275.
"Now till it holds below 34,500 levels, bounce could be sold and weakness may continue towards 34,000 and 33,500 levels, whereas resistances are placed at 34,750 and 35,000 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
A positive setup was seen in Federal Bank, Power Grid Corporation, HCL Technologies, Indian Energy Exchange, Infosys, Gujarat Gas, Maruti Suzuki and HDFC. While weakness was seen in Canara Bank, Zee Entertainment Enterprises, Can Fin Homes, Mindtree, Trent, Motherson Sumi Systems, LIC Housing Finance, IndusInd Bank, SRF, Vedanta, Nestle India, BHEL, L&T Infotech, Marico and RBL Bank, he said.
The broader market also remained under pressure, with the Nifty midcap 100 and smallcap 100 indices falling 1.8 percent and 2.1 percent, respectively.
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