Trade setup for March 7: Is Nifty50 approaching a near-term bottom? Check out key market cues, technical signals, important levels to track

The Nifty50 has formed a reasonable negative candle on the daily chart with upper and lower shadows, which could be a sign of continuation of the downtrend, according to Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Strong overhead resistance at 16,800-17,000 is left unchallenged and initial support at 16,250 breached, suggesting more weakness for the market ahead, he said.

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"Although markets are oversold for the last few days, there is no respite overall and we cannot forget that this correction has lot to do with geopolitical concerns with respect to Russia and Ukraine. Till the time things do not stabilise there, the market is likely to sway on newsflow... One should brace for similar volatility and surprises on either side," Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, told CNBCTV18.com.

"War kind of scenarios are always tricky... We can clearly see a negative trend on the weekly timeframe... Although the Nifty has reached our initial target of 16,200, we do not want to pre-empt any near-term bottom," he added.

At 7:42 am on Monday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty index -- were down 416.5 points or 2.6 percent at 15,827.5, suggesting a steep gap-down opening ahead on Dalal Street.

Equities in other Asian markets began the week with deep cuts as oil prices soared amid the risk of a US and European ban on Russian supply and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets. The Russian-Ukraine war showed no sign of cooling.

MSCI's broadest index of Asia Pacific shares outside Japan was down 2.8 percent in early hours.

Japan's Nikkei 225 was down 3.3 percent, China's Shanghai Composite 1.1 percent and Hong Kong's Hang Seng 4.1 percent. South Korea's KOSPI was down 2.3 percent and Singapore's Straits Times 0.8 percent.

S&P 500 futures were down 1.5 percent. On Friday, the three main Wall Street indices fell 0.5-1.7 percent.

"We do not want to sound too pessimistic but looking at the current scenario, we will not be surprised to see the Nifty entering sub-16,000 terrain. In a worst-case scenario, we do not expect the index below 15,500-15,200 levels as of now," said Chavan.

He sees immediate support at 16,000-15,900 and strong resistance at 16,450 and then 16,600. Investors can use the current juncture as an excellent opportunity to bag quality stocks in a staggered manner but the worst may not be behind for traders, he added.

Exchange data shows the maximum call open interest is accumulated at the strikes of 17,500 and 17,000, with 1.3 lakh and more than 98,000 contracts respectively. On the other hand, the maximum put open interest is at 15,500, with nearly 44,000 contracts.

This suggests the Nifty faces a major hurdle at 17,000 before 17,500, and meaningful support comes in only at 15,500.