The Nifty 50 has seen a significant sell-off recently and the Benchmark Index is now just 7.8% away from its 52-week low of 21,281.45.
According to the analysts, the Nifty is seeing persistent buying at 22,800 level. This makes it a critical support zone for bulls.
“The index has been experiencing buying interest at lower levels and has managed to close above the key support level of 22,800 for the past five trading sessions,” said Siddhartha Khemka, Head of Research and Wealth Management at Motilal Oswal Financial Services.
Dhupesh Dhameja, a derivatives analyst with Samco Securities said that there’s persistent accumulation at lower levels, which sustained the upside momentum. Yesterday’s close indicates a gradual recovery in market sentiment. “The 22,800 zone has emerged as a key demand area, lending support to the ongoing recovery attempt. However, unless the index decisively breaches the 23,200 resistance, upside moves are likely to encounter stiff opposition, fueled by renewed call writing and technical hurdles,” added Dhameja.
Similarly, Prashanth Tapse, Senior Vice President of Research at Mehta Equities said Nifty shows potential strength if it closes above 23,000.
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“We are of the view that the current market texture is non-directional, but 22,800 will be the sacrosanct support zone for day traders. Above this zone, a pullback move could continue up to 23,100-23,200,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities. If the index falls below 22,800 then it can test the 22,650 mark as well, said Chouhan.
However, analysts are concerned about small and midcap stocks as they have been underperforming the largecap stocks.
On Tuesday, the Nifty 50 closed the session 0.06% lower at 22,945.30, recouping from an intra-day low of 22,801.50.
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