The market on March 20 lost all its previous day's gains and ended the first session of the week with a six-tenth of a percent loss. However, it witnessed nearly a percent recovery from the day's low. Selling in most sectors, barring FMCG, dragged the benchmark indices down, while weak global cues after the Credit Suisse-UBS deal also weighed on sentiment.
The BSE Sensex dropped 361 points to 57,629, while the Nifty50 shed 112 points to 16,988 and formed a bearish candlestick pattern with a long lower shadow which resembles a Hammer kind of pattern on the daily charts, which is a bullish reversal pattern.
After the formation of a couple of Doji patterns on Thursday and Friday, Nifty forming a Hammer type candle pattern indicates that the market is forming a base around 16,800 levels and one may expect upside bounce in the short term," Nagaraj Shetti, Technical Research Analyst at HDFC Securities saidA sustainable upside above 17,150 levels could confirm a short-term bottom pattern, he said.
The broader markets have seen major correction compared to benchmarks, with the Nifty Midcap 100 and Smallcap 100 indices falling 1 percent each on weak breadth. The volatility index India VIX closed above 16 mark, up 8.4 percent, making the bulls uncomfortable at Dalal Street
The Bank Nifty fell 236 points to 39,362 and formed a Hammer kind of pattern on the daily charts for the second consecutive session, which is a bullish reversal pattern.
The index remains in buy mode as long as it holds the support of 39,000 on a closing basis. The immediate upside hurdle is visible at the 39,700 - 39,800 zone and a break above this will lead to further short covering on the upside," Kunal Shah, Senior Technical & Derivatives Analyst at LKP Securities said.
The important pivot level, which will act as a support, is at 39,054, followed by 38,920 and 38,702. On the upside, key resistance levels are 39,490, followed by 39,624, and 39,842.
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