The benchmark Nifty50 index has managed to find support around its 100-day moving average (DMA). Last month, the index slipped below that key technical indicator on April 12 and April 20 but managed to rebound. A fall below the 100-DMA is considered to be a bearish signal.
On Friday, the index closed at 14,631, after dropping 264 points, or 1.8 per cent. Despite the sharp fall, the 50-share index currently trades above its 100-DMA of 14,459.
Analysts say as long as the index holds on this key support level, the market can remain ‘upward trending.’ “The Nifty has seen a hammer formation on a weekly basis. We would need to see whether it acts as a bullish continuation or bearish reversal... Supports would be 14,600, 14,500, and 14,300. On the higher side, 14,850 and 15,000 could be major obstacles. After topping 15,050, the Nifty would rally to 15,500 levels,” says Shrikant Chouhan, executive V-P(equity technical research), Kotak Securities. Investors should be cautious as the markets would see a wild reaction to state election results and any earnings disappointment, experts say. “On the downside, the index has good support at 14,580-14,500. If the index manages to sustain these levels, some bounce is possible. Otherwise, it may even slip towards 14,200. There is resistance around 14,730-14,810. We may see profit-booking again around these levels,” says Rohit Singre, senior technical analyst at LKP Securities.