The turmoil was seen in the mid and the smallcap space as the broader market continues to underperform with S&P BSE Midcap index losing 1.5 percent while the S&P BSE Smallcap index was down 2 percent.
The Nifty50 slipped below its crucial support placed at 10,700 levels in Wednesday’s trading session where it hit an intraday low of 10,652.40 and then bounced back to marginally close above its 50-day exponential moving average (EMA) placed around 10,670.
Most experts highlighted 10,700 to be a crucial base for the index and a breach of this could extend the selling pressure on the downside. Most traders have kept 10,700 as a stop loss of all long positions and with breach of the said level would mean many stop losses might have got triggered.
If the index continues to trade below 10,700 in the coming sessions there is a higher probability of it touching 10,400-10,500 levels, suggest experts. However, a close above 10,800-10,850 could restore bullish momentum, they say.
The index is now trading below most of its short-term moving averages such as 5, 13, 20-EMA and 50-DMA. The index was trading in a range of 10,700 on the lower side and 10,840 on the higher side in the last six trading session.
The index breached this range on the lower side with index closing at 10,671, down 97.75 points or 0.91 percent. The S&P BSE Sensex ended 272 points lower at 35,217.
Trade tensions between the world’s two big economies US and China, relentless selling by foreign institutional investors (FIIs) which have pulled out more than Rs 12,000 crore from Indian markets (including debt) so far in the month of June, and rally in crude oil prices along with falling rupee led to weakness on D-Street.
“Market has broken down from the range they had held for the better part of this month, this break below 10,700 could see the range shifting downwards towards the 10,500 levels,” Nikhil Kamath, Co-founder, Zerodha told Moneycontrol.
“Rising crude and a depreciating currency could continue to add further weakness in the short term. Chinese recession could also cause a dip in demand for domestic exporters,” he said.
The turmoil was seen in the mid and the smallcap space as the broader market continues to underperform with S&P BSE Midcap index losing 1.5 percent while the S&P BSE Smallcap index was down 2 percent.
Over 300 stocks on the NSE hit new 52-week low including names like Amtek Auto, GATI, HCC, Indiabulls Real Estate, Jet Airways, Jain Irrigation, Kwality, NBCC, NTPC, SREI Infra, and Union Bank among others.
On the BSE, nearly 500 stocks have hit fresh 52-week low including names like NBCC, Punj Lloyd, IndoCount Industries, Jain Irrigation, Syndicate Bank, SREI Infra and JM Financial among others.
Here what experts are saying about the next target of Nifty after a breach of 10,700:
Analyst: Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in
The Nifty50 has broken down its consolidation range between 10,850-10,700 levels before signing off the session with a Bearish Belt Hold kind of formation. However, as Nifty50 closed marginally above its 50 Day EMA (10669) any bounce back from that level on expiry session shall provide some relief to the bulls.
If the index continues to trade below this level then the selling pressure shall get further accentuated, as all stops on positional longs may get triggered, with a near-term target placed below 10400 levels on Nifty50. Hereafter, bulls may not regain their strength unless Nifty50 closes above 10,800 levels.
Analyst: Mustafa Nadeem, CEO, Epic Research
The Nifty formed a Bearish Belt Hold pattern as it ends below 10,700 after almost three weeks of consolidation. A close below short-term 50-Day MA is signalling bearishness in sentiments in short-term as it’s almost after a month it has closed below that average.
We have an expiry on Thursday an aggressive writing is observed which shifted to 10,700 from 10,800 strikes indicating bearishness. Further, a rise in Volatility has made traders opting for Puts. With a closing below 50-SMA, we expect a bearish momentum to continue.
We would watch Nifty in the first couple of hours on the expiry day as it may further get volatile and the pain may intensify to lower levels around 10,610 – 10,600.
Analyst: Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas
The Nifty opened on positive note today only to face selling pressure. It formed a Bearish Belt Hold candle formation. Not only that, but the index has also formed an Engulfing bear candle on Wednesday.
On the way down, the index has broken the swing low of 10701 as well as the crucial daily moving averages. These observations indicate that the distribution over last few sessions is finally over & the bears have taken the charge completely.
The benchmark index now looks poised to test the May low of 10417 with potential to slide down to significantly lower levels. On the flip side, 10785-10800 shall now act as a key hurdle zone.
Please update in the my copy
Analyst: Jayant Manglik, President, Religare Broking Ltd.
With lack of any fresh positive domestic triggers and uncertain global cues, some further correction/consolidation in the Indian markets cannot be ruled out.
Market participants will continue to monitor the progress of monsoon and movement of crude oil prices & currency (INR versus USD). Volatility may be induced if the global trade war rhetoric escalates. We advise traders to remain cautious and avoid risky leveraged positions.
