Tech view: Nifty forms Hammer-like pattern; small pullback not ruled out
A pullback cannot be ruled out on Wednesday, but the overall trend remains negative.
The index formed a Hammer-like pattern on the daily chart and is expected to find support around the 10,550 level, failing which it may extend its downtrend towards the 10,400 level, given the prevailing weak market breadth.
A short-term pullback cannot be ruled out on Wednesday, but the overall trend remains negative, analysts said.
For the day, the index slipped 35.35 points, or 0.33 per cent, to 10,539. During the session, the index respected the support at the 10,550 level, said Chandan Taparia, who expects the index to face resistance at 10,680 and 10,707 levels.
He sees the index fall to 10,500-10,480 levels, if it fails to hold the 10,550 level.
Some buying can be expected near the immediate support at 10,550 level, but a sharp upside bounce is ruled out. RBI's mid-quarter policy review is going on, and the decision on the key rates would be out by Wednesday afternoon. Any negative outcome could have negative impact on Nifty, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
If the corrective structure is in progress from the high of 10,717 registered on May 29 and the pullback move from the low of 10,417 registered on May 23 has not ended at the recent high of 10,770, then in Elliot Wave parlance, this correction should end below 10,558 in the form of an 'Expanded Flat', paving way for continuation of the pullback rally beyond the 10,770 level, said Mazhar Mohammad of Chartviewindia.in.
The 10,550 level coincides with the 50- and 100-day SMAs, which remain crucial supports, said Rajesh Palviya at Axis Securities
“The Nifty50 is likely to face hurdle around the 10,620-10,630 range and any sustainable move above this will trigger further upside towards 10,660 and 10,690 levels,” he said.
Until more clarity emerges on market direction, traders are advised to take a neutral stance on the indices, Mazhar said.