Sameet Chavan, chief analyst-technical & derivatives, Angel Broking, said: “Monday’s tail end sell off was followed by a gap up opening on Tuesday, mainly on the back of strong favourable cues from the Hang Seng (Hong Kong) Index. However, the entire lead got sold into in first 10 minutes of trade. In fact, the selling pressure aggravated to breach previous day’s low as well. However, a smart recovery in the penultimate hour pushed the index higher to conclude with negligible gains.
“The index precisely started correcting after testing the resistance of 10490 in the opening trades. Once again, the banking pack turned out to be the weakest link as we saw heavyweight banking stocks dragging the index during the major part of the day. However, this was followed by a smart recovery from a kissing distance of 10400; courtesy to decent bounce back in Bank Nifty from its key support zone.
“Going ahead, we continue to see 10490–10520 as a sturdy wall and despite 10400 holding as a strong support, we expect the index to slide below it to test 10380-10340 in days to come.
Factors at play
The Nikkei India Manufacturing Purchasing Managers' Index rose to 54.70 in December 2017 from 52.60 in November 2017. European markets fell as investors continued to monitor geopolitical unrest in Iran.
Anand James, chief market strategist, Geojit Financial Services, said: "Monday’s choppiness did dominate early proceedings (on Tuesday), and supports seemed to be giving away, but healthy core sector and manufacturing PMI growth, along with decent auto sales numbers rejuvenated. The approach of Q3 earnings season should mean that investors are less likely to rush into mass liquidations."