Trade Setup For May 10: Nifty To Test Further Lows As Weak Sentiment Persists

The benchmark indices might test lower support from current levels, given absence of any major positive trigger and the current weak market sentiment, according to market analysts.

On daily charts, the index has formed a long bearish candle, which supports further weakness from the current levels, according to Shrikant Chouhan, head of equity research, Kotak Securities Ltd.

"We are of the view that, the short-term market texture is weak but due to temporary oversold conditions, we could see one technical pullback rally from the current levels."

Nifty has broken below both the lower boundary of its upward channel and the support of the 50-day exponential moving average (DEMA) around the 22,150 level, according to Ajit Mishra, senior vice president, research, Religare Broking Ltd. The ongoing increase in the volatility index suggests that the current market sentiment may persist, potentially leading Nifty to test the 21,800-21,850 zone soon, he said.

With voter turnout ratio slightly lower than 2019 for the same seats (except Assam), investors have turned nervous about BJP’s expected seat count, said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services Ltd. He expects this volatility to continue in the near term in the absence of any major positive trigger, he said. "Now till Nifty holds below 22,000 zones, weakness could be seen towards 21,700."

The GIFT Nifty was trading 35 points or 0.16% higher at 22,163.50 as of 06:40 a.m.