However, the reversal has come on poor volumes in the F&O segment, which has declined by Rs 10,000 crore over the previous day's volumes.
Markets players are worried with the drop in volumes and they expect a new low for the Nifty and the Sensex in coming days. According to Kamlesh Langote, a technical analyst at vfmdirect.com, the short-term downturn will reverse only if the Nifty closes above the 4,550 level in the next 2-3 days.
The widening discount, which has increased from 22 points yesterday to 31 points today, indicates that bears are not worried about the discount and will go short whenever the market bounces back.
The trading volume in the Nifty June futures declined by 16.3 million contracts today and despite the dip, the open interest (OI) in Nifty futures went up by 8.38 per cent, indicating a short build-up by bear operators. Technically, the index is trading below the 200-DMA (daily moving average).
The 10-DMA is below the 20-DMA and the Nifty is trading below the 10-DMA and the 20-DMA. This indicates that the current trend has a negative bias.
Besides, the market has not closed the gap created on Monday (markets had opened gap-down) despite three attempts. If markets fail to close the gap created by the gap-down opening next week, new lows are possible.
