Despite positive global cues, domestic equity markets snapped a two-day winning streak and ended lower on Tuesday (May 16), with Nifty sliding below the 18,300-mark — dragged by auto, pharma, and banking stocks. Almost all the major sectoral indices fell, with banking, financial services, media and IT suffering deep losses. Only PSU banks and IT indices ended the day in positive territory.

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On Monday, May 15, the Nifty settled at a five-month high and Bank Nifty closed at an all-time high of 44,072, extending its bullish run since March.

So, how does the market look as it nears all-time highs. How is the health of the market? Here are the answers to these and other questions.

Explaining the technical picture of the market, Shrikant Chouhan, Head of Research (Retail) at Kotak Securities, told CNBC-TV18 that the last 4-5 weeks’ pattern shows that benchmark equity indices are going to do really well. However, the analyst says the markets remain cautious as they are seeing gradual or poor activity.

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"Eventually, the markets are finding a good amount of support whenever there is a correction. One thing is clear — there is buying happening in the market on a frequent basis," Chouhan noted.

On profit booking as Nifty approaches 19,000 levels, he said the strategy should be to buy on dips. He also said 17,800-18,000 levels are going to act as a very good support for the market. Further, the analyst said markets are likely to remain range-bound till the Nifty crosses 19,000 and the euphoria is expected only if it breaks 19,000 levels.

Speaking about Bank Nifty, Chouhan said the index looks bullish. The market expects Bank Nifty to move towards 45,500 levels, and on the downside, at 43,000 or 43,500 will act as a good support. "So, now the support has shifted from 40,000 to 43,500 levels and in case there is any correction, then we should buy on dips," he said.

Chouhan advices on buying frontline and mid-size banks on dips. The analyst named few bank stocks, including State Bank of India, HDFC Bank, ICICI Bank and Canara Bank, as the preferred picks.

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On Tuesday, the Nifty index experienced profit booking from its 78.6 percent retracement level of 18,450 after a previous fall from 18,888 to 16,823 levels. A bearish engulfing candlestick pattern formed on the daily chart, indicating possible profit booking in the market, experts said.

(Edited by : Shoma Bhattacharjee)

First Published:May 16, 2023 6:16 PM IST