The benchmark Nifty50 index on Thursday dropped below its crucial support zone on technical charts. This could result in further correction, say technical analysts.
The 200-day moving average— a key indicator used by traders for determining long-term market trends—for the Nifty was seen as a key support zone as the index had rebounded sharply from these levels (which fell around 16,800-16,900) on a few occasions in the past.
However, Thursday’s 815-point, or 4.8 per cent fall, saw the benchmark index surrender this level decisively. The Nifty closed at 16,248. “Fall has resulted in the breakdown of the consolidation range in the Nifty index and it might find support around the 15,900-16,000 zone,” added Ajit Mishra, vice-president, research, Religare Broking.
“After a long time, benchmark Nifty closed below the 200-DMA and has also formed a long bearish candle on the daily charts, which suggests further weakness. Considering the uncertainties hovering, Nifty may trade lower up to 16,000. For traders, 16,400 and 16,500 could act as intra-day resistance while 16,000 could be the immediate support zone,” added Shrikant Chouhan, head of equity research (retail), Kotak Securities.
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