Nifty formed a bearish candle with a long wick on the daily chart on Tuesday, after hitting an all-time high level of 20110. While analysts are not yet calling it a top reversal, the sharp sell-off in broad market indices is indicating more weakness ahead for the benchmark in the coming sessions. A decline below 19850 levels could confirm a short-term top reversal pattern for the market. Any upside rally from here could find strong resistance around 20100 levels, according to Nagaraj Shetti of HDFC Securities.

OI data indicates that on the call side, the highest OI was witnessed at 20100 followed by 20200 strike prices, while on the put side, the highest OI was at 19900 followed by 19800 strike price. The Nifty Put Call Ratio stood at 1.18.

Momentum indicators on the daily and hourly time frames are providing divergent signals, which could lead to sideways consolidation.

Analysts have provided their perspectives on what traders should do:

Jatin Gedia of Sharekhan by BNP Paribas believes that the short-term outlook is positive and this consolidation could be used as a buying opportunity. In terms of levels, the crucial support zone is seen around 19865 – 19810, while the immediate hurdle zone is at 20200 – 20250.

On the other hand, Rupak De, Senior Technical Analyst at LKP Securities, observed that Nifty witnessed a correction as sellers exerted pressure around the 20100 level. However, the correction was contained, thanks to put writers at 19900 who helped shield the market from further declines. In the short term, as long as Nifty remains above the critical short-term support level of 19780, it is expected to maintain its strength. On the higher end, a decisive move above 20100-20150 could propel Nifty toward 20500 in the short term.

(Written with inputs from The Economic Times)