Charts signal bounce possibility

Heavy selling emerged in the market after the huge rally seen in the previous session.

The market sentiments were affected on the back of a rise in oil prices due to fresh tension in the Middle East.

The Indian indices erased most of its previous session gains and ended on weak note with the Nifty finishing below 11,750 level. The Nifty ended 107.65 points or 0.91 per cent lower at 11,724.1, while the Sensex was down 407 points at 39194.

The broad market indices like the BSE Mid-Cap lost less, thereby outperforming the Sensex/Nifty. The market breadth was negative on the BSE. Sectorally, the top gainer was the BSE Power. The top losers were the BSE Auto, Telecom, Energy and FMCG indices.

Crude oil rose another 1 per cent on fears of a US military attack on Iran that would disrupt flows from the Middle East, which provides more than 20 per cent of the world's oil output.

World stocks fell on Friday, as worries about a threatened US military strike against Iran and a global trade conflict offset the positivity off a central bank-induced rally from earlier in the week.

Volumes were higher on the NSE despite a fall in indices after the recent in-news stocks like Jet Airways, UPL, DHFL, Rel Infra, Piramal Ent, IB Housing Finance, Yes Bank witnessed huge volumes with a lot of intraday volatility giving traders enough opportunities for making money. However a fall with high volumes and closing near the low of day is not a good sign for the early part of next week.

Technical View

According to analysts, after showing a lacklustre type of movement in the last few sessions, the Nifty slipped into a sharp weakness amidst a range movement.

A small negative candle was formed on Friday with opening a downside gap. Technically, this pattern signals a formation of high wave type candle pattern. The broader high low range of 11,780-11,550 levels is still intact and currently the Nifty placed near the lower end of a range.

The overall chart pattern signals a possibility of an upside bounce in the market in the next 1-2 sessions from near the support of 11,550 levels, and the Nifty could make an attempt to fill Friday's down gap over the next few sessions.

Technically, while the Nifty has corrected sharply, the recent lows of 11,635 have not been broken. Traders will need to watch if the Index can now hold above these lows in the coming week for the bulls to regain control. Immediate resistance is now at 11,812-11.844.

Market View

Vinod Nair, Head of Research, Geojit Financial Services Ltd said, "Concern over short fall in tax collection and RBIs indication of losing traction on growth impacted the sentiment, where government is not likely to stick on fiscal target of 3.4 per cent for FY20. Market seems to factor in some rationalization in GST rates in the upcoming meeting and more fiscal measures in the budget due next month. Delayed monsoon and a surge in oil prices due to US-Iran tensions further led the consolidation."