Analysts have differing views on the market trend. A technical analyst at Anand Rathi Securities expects the bearish trend to continue, with the Nifty tending down to 4200 during this month itself.

Technical analyst Ashish Shroff of Ambit Capital expects a decent bounce from current levels. The Nifty could target 32 per cent retracement (4650) of the decline from 5167 to 4370. The Nifty has formed an "inverted head and shoulder" pattern on the intra-day chart, with a target of 4650 as well.

According to a technical analyst at Motilal Oswal, the Nifty's failure to fill the gap at 4,530 and the range-bound trading on Friday indicated continued uncertainty about further downside, and this was further supported by the appearance of Parabolic SAR.

SAR is a trailing stop-and-reversal method that determines exit and entry points. One should sell a stock if it trades below the parabolic SAR, and buy or remain long in case the stock price is above the SAR.

The foreign institutional investors (FIIs) were net sellers, to the tune of Rs 7,710 crore, in the cash market last week. Moreover, they went short in Nifty futures, to the extent of 63,000 contracts. The FIIs bought in-the-money and at-the-money call options to hedge their short Nifty positions.

Major global equity markets remained under pressure. Shanghai was the biggest loser, crashing 14 per cent, after the central bank increased the cash reserve ratio by 100 bps for a fifth time this year.

The spike in oil prices revived concerns over consumer spending and led to speculations of another Fed rate hike, bringing the US markets lower.