New Delhi, 19 October (H.S.): Technical analysts are adopting a cautious approach towards the next trading session on Wednesday following a sharp sell-off in the domestic stock market on Monday. The decline dragged the National Stock Exchange’s Nifty 50 below the psychologically significant 22,900 mark to settle at 22,888.95, while the Bombay Stock Exchange’s Sensex plunged nearly 876 points to close at 73,852.90.
With the stock market remaining closed on Tuesday for Vijayadashami, traders are now preparing their strategies for Wednesday’s session. Following Monday’s steep decline, market experts believe that several crucial support and resistance levels could prove decisive for both the Sensex and the Nifty. Traders will need to factor these technical levels into their trading plans, keeping a close watch on market movements before taking positions.
Ravichander Khurana, Chief Executive Officer of Khurana Securities and Financial Services, said that an analysis of chart patterns and derivatives data indicated that the Nifty’s immediate support for Wednesday’s session lay in the 22,840–22,850 range. This zone also coincided with the index’s intraday low on Monday. According to Khurana, if selling pressure persists on Wednesday and the Nifty breaches this initial support, the next significant and stronger support is likely to emerge around 22,780.
Market experts believe that the broader bullish trend would remain largely intact as long as the Nifty manages to hold above 22,780 on a closing basis. Under such circumstances, Monday’s decline, or a similar fall, could be viewed as a routine technical correction rather than a definitive reversal of the broader trend.
On the upside, if short-covering or a recovery from lower levels emerges during Wednesday’s session, the Nifty is likely to encounter its first major resistance in the 22,980–23,020 range. A decisive move above this psychological barrier could pave the way for a renewed recovery, potentially allowing the index to advance towards higher targets of 23,150–23,600.
The Sensex’s technical chart has also weakened following Monday’s 876-point decline, which breached several important support levels. For Wednesday’s session, the index’s first crucial support is expected to be around 73,700, close to Monday’s intraday low. If this level gives way during the morning session amid weakness in global markets, the Sensex could find stronger support in the 73,350–73,100 demand zone. Buyers may attempt to stabilise the market in this range.
However, Khurana cautioned that any recovery in the Sensex could face its first significant resistance in the 74,250–74,400 range. Unless the index establishes itself firmly above this zone, every upward move could remain vulnerable to profit-booking and renewed selling pressure.
Market experts have advised traders not to panic despite Monday’s decline, but to formulate their strategies cautiously. Last week, the market managed to close above its 20-day simple moving average (SMA) for the first time since August, indicating that the broader technical structure had not weakened entirely.
The market had rallied nearly 4 per cent in a largely one-way move from the lower Bollinger Band over the preceding few sessions. Against this backdrop, Monday’s mean-reversion move, or technical correction, was considered necessary from a chart-based perspective.
For investors and intraday traders, experts suggest avoiding hasty decisions and refraining from building large positions prematurely on Wednesday. Instead, they should allow the market time to stabilise around the identified support levels before deciding on their next move.
This cautious approach is warranted because movements in international crude oil prices and continuing geopolitical tensions could keep the domestic market highly volatile over the next few days.
---------------
Hindusthan Samachar / Jun Sarkar
