In a comment to the Bloomberg news service Tejas Shah, a technical analyst at Edelweiss commented that the 50-stock index, Nifty, will find support at 4,777.74 level which is 38.2% retracement from its November 5 high of 6,338.50. Therefore, it should rebound to the level of 5,200 and create head-shoulders pattern.
Shardul Kulkarni, a technical analyst with Angel broking was quoted by the news-wire, 'There is carnage in the street. The Nifty is looking oversold on the charts.'
The main index, Sensex, of the oldest bourse in India, Bombay Stock Exchange, has slid by 21% in 2011 so far. The index is trading at a price-to-earnings (PE) of 13.4times, compared to this the MSCI emerging market index is trading at PE of only 9.6times.
In the mean time, stock markets all over the world are reeling under pressure on concern of economic recovery in US and the deteriorating condition of European market.
Last week fall in Sensex has been for the fourth consecutive week. This was the longest losing streak in since the panic of 2008. At that time Lehman Brothers collapsed and credit market froze.
In technical analysis, analysts as well as investors study charts to identify the trading patterns from price moments, which can be used to predict the direction of the movement n a security, currency, commodity or index.