As expected the markets sold off from higher levels on Thursday. Friday may not be much different as the weekend factor will come into play ahead of the RBI policy review early next week.
The Sensex after touching a high of 17,976 in early trades, pared gains and later tanked heavily towards the close to a low of 17,619 owing to weakness in select index heavyweights - Reliance, ITC and SBI. Realty stocks, however, managed to buck the trend.
The Sensex finally ended with a significant loss of 183 points at 17,639. The index has closed below its short-term moving average, which is a negative sign. And now, the index looks set to test 17,300 which not only is the lower end of the bollinger band, but also coincides with 38 per cent retracement of the nine-week rally.
Today, the Sensex may face resistance around 17,775-17,860, while seek support around 17,500-17,420.
The NSE Nifty moved in a range of 108 points, from a high of 5,373 the index tumbled to a low of 5,265, and finally settled with a loss of 49 points at 5,274.
The Nifty yesterday broke its crucial support of 5,290, and now looks almost certain to test 5,250. Below which, the index may drop all the way to 5,100.