The short-term texture of the market is still on the weak side, with the volatility set to remain on the higher end in the near term, according to market analysts.
The market slipped below the 20 and 50-day simple moving average last week, and consistently faced selling pressure at higher levels. Technically, on daily and weekly charts, it has formed double top formation, which indicates the upward trend has slowed down, according to Amol Athawale, vice president of technical research at Kotak Securities.
“We are of the view that the short-term texture of the market is still on the weak side but due to temporary oversold conditions, we could see one pullback rally from the current levels.”
The volatility index is expected to remain elevated in the near term due to the elections and foreign investor sell-offs, which have impacted market sentiment, according to Shrey Jain, chief executive officer of SAS Online. “It’s advisable to maintain lighter positions and reduce exposure to mid and small-cap companies.”
The Nifty Bank indicates weakness with the index forming a shooting-star candlestick pattern on a weekly scale, according to Neeraj Sharma, assistant vice president of technical and derivatives research at Asit C Mehta Investment Interrmediates Ltd. “As long as the index remains below 48,000, ongoing weakness will continue.”
The GIFT Nifty was trading 25.5 points or 0.12% higher at 22,082.50 as of 06:47 a.m.