Trend may remain negative

Stocks continued to witness selling pressure, with the Sensex ending 156 points lower to settle at 35,387, while the Nifty 50 fell 60 points to close at 10,741. The BSE Mid-Cap Index fell 0.27 per cent but the Small-Cap Index rose 0.06 per cent. The market breadth was weak as 1,016 shares rose and 1,606 shares fell on the BSE.

Among the sectoral indices on the BSE, Energy was down 1.75 per cent, followed by Oil & Gas (-1.58 per cent) and Bankex (-1.17 per cent).

Technical view

According to brokerage Bonanza Portfolio, the Nifty has given a rising channel breakdown on the daily chart, suggesting a reversal of the previous bullish trend. In addition, the breakdown was backed by the rise in volume which indicates the significant participation of bears. During the day, Nifty found initial support around 20-day moving average (DMA) whereas on the higher end the index found resistance at the lower band of the rising channel.  At the end of the session, a doji kind of formation is seen on the daily chart of the Nifty.

“Going forward the trend is expected to remain negative as long as the index closes below the recent highest closing of 10,806.60. The current weakness in the market may take the Nifty towards 10,550. On the other hand, the trend may change back to “bullish” upon a closing above 10810,” Bonanza said.

Market view

Mustafa Nadeem, CEO, Epic Research, said the Nifty extended losses and volatility spurt on the back of negative domestic and international cues. The speculations over the Karnataka outcome has triggered profit booking at higher levels. The extension of losses was seen due to multiple negative cues.

Nadeem said in the short-term, support for Nifty may come in at 10,650-10680 and the index may consolidate between 10,680 to 10,850.

 

—Ashwin Punnen