Quick pullback rally possible

On the backdrop of weak global sentiments, the Indian benchmark indices on Tuesday corrected sharply as BSE Sensex was down by 316 points. Among sectors, profit booking was seen in energy, auto and metal stocks whereas some buying was seen in selective FMCG stocks.

Technically, after early morning selloff, the index took the support at 65,344 points. On daily charts, the index has formed bearish candle and on intraday charts, it is still holding lower top formation, which is largely negative.

“We are of the view that, the short-term texture of the market weak, but oversold. Hence, we could see one quick pullback rally in the near future. For the bulls now, 65,800 could be the immediate resistance zone,” says Shrikant Chouhan of Kotak Securities.

Above which, the index could move up till 66,200-66,500. On the flip side, 65,250 and 65,350 would act as a strong support zone for the traders. Below 65,250, the selling pressure is likely to accelerate. Below the same, the index could slip till 65,000-64,800.

Prashanth Tapse, senior V-P (research), Mehta Equities, says: “Bearish sentiment prevailed through the trading session as weak Asian cues triggered correction in automobile, oil & gas and metal stocks. Globally, the dollar’s continued strength against major currencies, including rupee has resulted in a flight of capital to safe haven dollar securities, thus making investors jittery.”

Ahead of the RBI’s credit policy outcome on Friday, markets may witness sideways movement, with focus likely to be on rate-sensitive sectors.