Tech View: Nifty50 may extend fall; adopt sell on rise strategy

NEW DELHI: The Nifty50 on Monday failed to find support at its 200-day moving average, as it cracked 1 per cent to settle below 10,100 levels. The index, which made a large bearish candle on the daily chart, has been making lower-high lower low formation. The larger trend for the index stays negative, say analysts.

There is a possibility for the index to see a small recovery from 10,000-10,050 range, said Nagraj Shetti Technical Research Analyst at HDFC Securities. The index has taken support in this range in the past. (See chart)

But any rise on the index should be sold into, as eventually the index may inch lower, Shetti added.

For the day, the index fell 0.99 per cent to settle at 10,094.25. During the session, the index hit an high of 10,224.55 and a low of 10,075.30.

Nifty has closed below its earlier swing low of 10,141 hit on March 7 on a closing basis, which confirms weak sentiment, said Rajesh Palviya, Head – Technical & Derivatives Analyst at Axis Securities.

Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan said the index has reached the trend line from previous swing lows. “The breach of this swing low confirms wave extension on the downside, with key targets placed at 10,000-9,800. An expansion in the daily Bollinger Bands is assisting the price action on the way down. Also the daily KST, having triggered bearish crossover, is pointing towards further downside,” he said.

Till the index remains trades below 10,180, the weakness could continue towards 10,000 and then 9,900-9,850 zones, said Chandan Taparia of Motilal Oswal Securities.

Shrikant Chouhan, Senior Vice President for Technical Research at Kotak Securities advised traders to short partially at current levels, 10,100 and balance at 10,200. "Keep stop loss for the same at 10,250, and expect the downtrend to continue to levels of 10,030 (minimum) and 9,900 (maximum),” he said.