The last leg of the bull-run that started in the middle of last year when the Sensex was hovering around 10,000 levels is over, feel technical analysts who we spoke to.
According to Elliott Wave Theory, the method of predicting market movements from pattern of waves plotted by market movement, the fifth or the final wave of the rally has come to an end. This theory says that a bull run comprises five waves, out of which three are upward moves and two are downward (interim corrections).
Analysts feel that the bull-run has seen through all the waves now.
"I remain negative on the markets. The Nifty is expected to settle between 3,200-3,400 in the next two-three weeks. Pullbacks if any, will be limited to 3,750. The fifth wave of the bullish trend has ended," says Vijay Bhambwani, CEO of Bsplindia.com.
So, is it time for a bear rule? Not really. The market may slip a little more to find support before consolidating around those levels. And then, another bullish pattern will take shape and set off on fresh legs. "A new five wave pattern will unfold in 6-12 weeks after the markets consolidate," says Bhambwani.
Where will the market find its support? "The trend is very bearish. Today the Nifty held on above 3,560, which is a technical support. However, if it falls below 3,510, then the index could test 3,420 levels," says Vinit Birla, technical analyst of Pranav Securities.
On Monday, the Nifty managed to close above 3,560, which is the 200-day moving average of the index. Technically, a correction could extend to as low as half of the indices' high.
Rather than global sentiments and concerns, this has been a rather long overdue correction in a market that has been marching up continuously for the last eight months.
"The tower has collapsed. If the Sensex dips below 12,000, it could test 11,000-levels. It could rally from there, but there is stiff resistance on the higher side. I advice day traders and small time investors to stay away from the markets," says Prem Daga, a technical analyst.