A sell-off across sectors say the Nifty50 wipe out all the previous day gains, breaking the psychologically important 10,000-mark on June 11. Weak global cues after the Federal Reserve dampened hopes of a quick recovery in the US economy triggered the selling pressure.

The index closed well below 10,000 levels and formed a bearish candle on the daily charts, as the closing was lower than the opening tick.

Experts advise caution as the selling pressure is likely to extend until the index trades around 10,100 levels.

Traders who are short on the market should continue their positions with a stoploss above 10,112 on a closing basis and look for a target of 9,600, said Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in.

The Nifty50 opened lower at 10,094.10 and extended losses to hit the day’s low of 9,885.05 in the late trade. The index settled near the intraday low at 9,902, down 214.20 points, or 2.12 percent.

“The bears appear to be flexing their muscles as the Nifty seems to have registered a breakdown from its six-day-old congestion zone with a full-fledged bearish candle.  As long as this index remains below 10,112 levels, in the near term, it shall head to bridge the bullish gap area present in the 9,706–9,598 zone which was registered on July 1,” Mohammad said.

Some buying interest in the Nifty would emerge at around 9,600 levels and unless the bears manage to decisively push the index below 9,598, a deeper correction should not be expected. A mild strength on the upside can be expected if the bulls manage to get past the psychological hurdle of 10,000.

The bulls need a decisive close above the 100-day moving average (which is placed at 10,229) to turn the tide again in their favour, he said.

Among sectors, auto, FMCG, IT, metal, pharma, realty, energy and infra were down 1-3 percent.

“Now if the index continues to trade below the 10,000-mark, then we may see some cuts towards immediate support zone of 9,800-9,700 zone. On the other hand, a strong hurdle is formed at 10,000-10,100 zone on the upside,” Rohit Singre, Senior Technical Analyst at LKP Securities, said.

The Bank Nifty also fell sharply below the 21,000-mark. It opened down at 21,084.70 but rebounded for a short period to hit the day’s high of 21,244.45 in the initial hour. However, it erased the gains and extended the selling pressure to touch the day’s low of 20,458.30 in the late trade.

The index settled at 20,525.20, down 574.90 points or 2.72 percent and formed a bearish candle on the daily charts.

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