Trend reversal pattern emerges

The market saw highly volatile trade with the Sensex swinging by over 500 points as the Karnataka election results gave a negative surprise. The Sensex hit a high of 35,993.53 in morning trade, but it met with profit-booking at higher levels and slipped in the negative zone to hit a low of 35,497.92, before settling 12.77 points higher at 35,543.94. The gauge had gained 310.44 points in the previous two sessions.

The Nifty reclaimed the key 10,900-mark to touch a high of 10,929.20 in initial trade and fell back by 4.75 points, to end at 10,801.85.

Sectorally, the BSE realty fell the most at 1.90 per cent, followed by PSU at 0.76 per cent, Infrastructure at 0.72 per cent and Auto at 0.71 per cent.

Succumbing to profit-booking, the Mid-cap Index fell 0.81 per cent and Small-Cap, 0.65 per cent.

Technical view

Sameet Chavan, chief analyst-technical & derivatives, Angel Broking, said: “Due to an intraday volatility, the daily chart now depicts a ‘Gravestone Doji’, which is considered as a probable trend reversal pattern. More importantly, it has occurred exactly at the 78.6 per cent retracement of the recent down move. Yes, the pattern needs a confirmation below its low; but considering the overall set up, we will not be surprised if it happens soon... In this scenario, the index may immediately correct towards 10,724 – 10,700 levels; whereas, on the higher side, 10,840 followed by 10,880 would act as strong hurdles. Any attempt to bounce back towards these levels can be used as an exit opportunity.”

Market view

Mustafa Nadeem, CEO, Epic Research, said: “The Nifty reclaimed the 10,900-mark, making an intraday high of 10,929.20 while the Bank Nifty inched close to the 27K-mark after making an intraday high of 26,972t. Both benchmark indices closed lower than open and erased all the gains since indecisiveness arose over the Karnataka results and profit booking was triggered. The Nifty was dragged to the 10,800-mark while the Bank Nifty saw a sharp cut of almost 500 points to close below 26,500.

—Ashwin Punnen