“The index needed to take a breather,” said Gaurav Ratnaparkhi of Sharekhan, who said the hourly momentum indicator has entered the overbought territory.
“The index has stepped into a short-term consolidation. Structurally, we have a short-term top in place at today’s high of 17,225. Unless that gets taken out, Nifty50 is expected to go for a minor degree dip. Initial support on the downside stands at 17,000 level, whereas it can test the 16,800 level over the next few sessions, before getting ready for the next leg up,” Ratnaparkhi said.
For the day, Nifty closed at 17,076, down 55.95 points or 0.33 per cent.
Mazhar Mohammad of Chartviewindia.in said the correction occurred after hitting the upper boundary of an evolving channel over the last 91 sessions. He expects weakness to continue if the index slips below 17,055 level.
“Post Wednesday’s price action, our proprietary twin momentum oscillators generated a sell signal. Going forward, the trend shall remain sideways with a negative bias. In case of weakness, the initial target can be at 16,900 level. Any such weakness can be considered as an opportunity to go long, as unless Nifty bridges the bullish gap zone between 16,764 and 16,722 levels on a closing basis, major weakness is unlikely,” he said.
Independent analyst Manish Shah said Nifty50’s MACD is in the buy mode and is sending out bullish readings on directional movement oscillators. Any drop to the 16,950-16,780 zone, he said, would offer good buying opportunities.
“The weekly expiry is likely to be tepid on Thursday, but the index could rally towards the 17,300-17,350 zone for the next weekly expiry. This remains a buy-on-decline market,” said he.