Nifty support seen near 10900

After the volatile trade, Sensex and Nifty closed in the red as the investors remained cautious on economy concerns. The Sensex closed at 37451.84 falling 189.43 points, or 0.50 per cent, while the Nifty shed 59.25 points, or 0.53 per cent, ending at 11046.10.

The Nifty remained weak throughout the day and went below the level of 11000. However, towards the end it tried to erase intraday losses ahead of the proposed announcement on relaxing FDI norms in several sectors.

Technical View

Technically, Wednesday's weakness in the Nifty could indicate a short term reversal in the market. There is a possibility some more weakness in the next 1-2 sessions.

After the formation of confused type of candle pattern in the last session, the Nifty slipped into weakness and closed on a modest loss, analysts said.

"We observe a formation of decent negative candle as per daily time frame chart. This indicates a near term down reversal in the market. The key overhead resistance of 11,150 levels (resistance as per the concept of change in polarity) is so far weighing high on the market," said Nagaraj Shetti, Technical Research Analyst, HDFC Securities

But, the expected decline is unlikely to damage the recent uptrend status of the Nifty. Important supports to be watched around 10900-850, where one may expect reliable upside bounce from the lows, he further said.

 "On Thursday, on the back of weekly and monthly expiration of the contract, we can expect greater volatility in the market. Nifty would remain in the range of 10900 and 11150, buy in select companies if Nifty corrects to 10900 levels," said Shrikant Chouhan, Head Technical Research, Kotak Securities.

Market View

The recent announcement made by the finance minister and the outcome of RBI board meet are definitely positive for the markets. This is likely to lift domestic sentiments in the near term. Going forward, the market participants would keep a close watch on currency movement and upcoming Q1FY20 GDP data. Globally, trade tensions between US-China is likely to induce volatility into the Indian markets.

"Despite reversal in surcharge, FPIs continued to be net sellers due to clouds over global trade discrepancies, risk of recession and fall in bond yields, which are having a ripple effect on the market. Consensus estimates a drop in domestic Q1FY20 GDP growth to 5.7 per cent and weakening rupee impacted investor's optimism on earnings," said Vinod Nair, Head of Research, Geojit Financial Services.