The domestic equity market kicked off the week on a disappointing note, as political jitters and subdued global cues took the benchmark Nifty down nearly 2 per cent on Monday.
In the process, the index formed a falling window pattern on the chart, signalling further bearishness.
As the index had bounced back from the 50-day moving average (DMA) in previous two sessions, this level was expected to offer support.
However, Mondays gap-down start saw Nifty open below this crucial support.
In a feeble attempt to recover, Nifty halted at the 50-DMA, which acted as resistance.
Though Nifty ended over 205 points down, the intraday range remained within some 40 points.
The index, which opened over 185 points down, ended the day at 205.25 points or 1.92 per cent lower at 10,488.
The index touched an intraday high and low of 10,558 and 10,474, respectively.In the process, daily MACD made a negative crossover and the RSI marked a fresh 14-period low, which are bearish signals, and a falling window occurred on the candles, said Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory.Though the emergence of negative technical developments can translate into more weakness in the market, they should not be read singularly, analysts said.Mondays weakness occurred in reaction to the exit polls and the market will react to the election results on Tuesday.
Despite these negative developments on the charts, any favourable election outcome will negate these adverse technical signals and we will see the market recover again, Vaishnav said.The index has been making lower highs for last five sessions.
The near-term oscillators are in sell mode.
Given the weak breadth and poor price structure, the market could fall further.
Any rise could be muted around the 10,600 mark.
We revise the support to 10,360 and subsequently 10,250 levels, said Arun Kumar, Market Strategist, Reliance Securities.