It’s a sea of red across most major indices in the stock market. But no this is not Valentine’s Day fever. The key indices slipped to trade on a host of concerns. The Nifty 50 dropped 290 points from its day’s high on Friday while the Sensex dipped over 890 points. The analyst pointed out that the next important support is placed around 22,500 on the Nifty.
According to Anand James, Chief Market Strategist at Geojit Financial Services, “Sentiments remain low as the broader market is in a sea of red. But with VIX rising only a modest 2.9%, a recovery swing without penetrating 22800 by much could be seen. Immediate support below is at 22,585 and 22,380. Alternatively, push above 22,950 could aim for 23,060-23,220.”
“A decisive break below this level might trigger a sharp correction in the short term. On the higher end, it faces resistance at 23,100, above which it might witness some respite,” added Rupak De, Senior Technical Analyst at LkP Securities.
According to Aakash Shah, a Technical Research Analyst at Choice Broking, the 50-stock benchmark has formed an inverted hammer on the daily chart. This means that it is difficult for the index to sustain higher levels. “Key support is placed at 22,900, with a breakdown potentially leading to 22,775, while resistance is observed at 23,250 and 23,500. A sustained close above 23,500 could drive the index towards 23,800–24,000,” he said.
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Giving some hope, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that the oversold market can bounce back in the near term but a sustained rally is not likely owing to continuous FII selling. “Only a decline in the dollar and US bond yields will turn the FIIs into buyers. So watch out for this space,” said Vijayakumar. For context, FIIs have been net sellers in February, except for February 12 when they bought equity worth Rs 809.23 crore. Not just in Feb but in January it was a net seller of Rs 87,374.66 crore.
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