A morning walk down Dalal Street: Index looks oversold, pullback rally likely

Indian markets closed lower after starting firmly in green on Friday. Both Sensex and Nifty posted biggest monthly decline since October 2008.

The Nifty50 erased more than 700 points while the Sensex plunged 2,400 points in September. Although, last-hour recovery helped Sensex to hold 36,200 and Nifty 10,900 levels.

The index looks oversold and chance of a pullback rally is on cards Investors should use pullback rallies to exit long positions, suggest experts.

Technically, if the index sustains below 10,850 then the pressure would increase on the downside and we may see Nifty testing its 200-DMA which is placed near 10,770. On the other hand, the 11150 – 11170 levels are strong resistance zone and only a decisive move beyond this level will attract fresh buying interest.