Technical View: Nifty forms bearish candle on weekly chart, weakness seen if index breaks 9,200

The Nifty50 failed to hold on to a strong opening and closed off the day's high on May 8 as the economic fallout of the coronavirus, a spike in infections and weak earnings weighed on investors. Correction in banks also hit sentiment but RIL, FMCG and IT stocks supported the market.

The index closed in the green but failed to hold the crucial 9,300-mark to form a bearish candle on the daily charts as the closing was much lower than the opening level.

For the week, too, the index formed bearish candle, as it lost more than 6 percent after rallying nearly 8 percent in the week before.

The price behaviour of the last five trading sessions also depicted a bearish candle on weekly charts, perhaps signalling a pause to the strong upmove seen in the preceding week, experts say.

As the market appears to be directionless, traders are advised to remain neutral and intraday traders can consider initiating shorts below 9,190 and look for a modest target of 9,100.

The Nifty50 opened strong at 9,376.95 to immediately hit an intraday high of 9,382.65. It soon turned volatile and lost some gains to hit the day's low of 9,238.20. It closed at 9,251.50, up 52.45 points or 0.57 percent.

"Unless the Nifty clears the hurdle of 9,382 levels in the next one or two trading sessions, the trajectory of this market shall remain on the downside and weakness shall get confirmed with a close below 9,200 levels. In that scenario, it shall eventually head lower with an initial target of 8,900 levels," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.

But, if the index closes above 9,382, then will test the bearish gap present in the 9,533–9,731 zone registered on May 4, he said.

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities, said the closing of the Nifty and the Bank Nifty near the day's lowest level would be negative for the coming week.

The Bank Nifty also opened strong but wiped out all gains in the last hour of trade to slipped into the red. The index closed 138.90 points, or 0.71 percent, lower at 19,352.90 and formed a bearish candle on the daily charts.