The stock markets had been rallying sharply over the past few sessions and hence investors booked some profit today, but not before key benchmark indices hit fresh record highs in early trade. The markets erased off intra day highs to close lower on August 18. At close, the Sensex was down 162.78 points or 0.29 percent at 55629.49, and the Nifty was down 45.80 points or 0.28 percent at 16568.80. About 1,037 shares have advanced, 2067 shares declined, and 110 shares are unchanged.

"Nifty gave a sharp correction after making a lifetime high of 16701 and closed near its day low at 16550 down by 60 points. Banknifty also closed below its key support level at 35480 down by 380 points. Today's bearish movement indicates a beginning of a possible correction. Nifty has support at 16480 and 16450 levels below which it can test 16350. Banknifty can test 35200 and 35000 in the next few days" said Gaurav Udani, CEO & Founder, ThincRedBlu Securities.

Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities Ltd, said, "After a long time on daily charts, Nifty has formed a bearish candle and intraday charts are also indicating a further weakness from current levels. In the near future, the benchmark index may consolidate between 16,420 to 16,700 levels. On the down side, 16,500-16,450 could be the key support levels. On the other hand, the 16,650-16,700 level would be the immediate hurdle for the index. Below the 16,450 level, uptrend could be vulnerable."

Nifty has formed a bearish “Dark cloud cover” on daily charts. Even though it made a new high in the morning, the fact that contrary to the regional markets it failed to sustain gains and ended in the negative raises some concerns, said Deepak Jasani, Head-Retail Research, HDFC Securities. "Broader market continues to show negative advance decline ratio for the fourth consecutive session. Nifty may find it difficult to breach today’s high of 16702 for the next 1-2 sessions," Jasani added.