Laurence Balanco, Asian Technical Research at CLSA expects the Nifty to trade rangebound between 4,700 and 5,100 for the near-term.
"For us, base case scenario is that we need to rebuild a basing pattern between 4700-5100 areas. And if we had a slip below 4700, that does see the technical picture deteriorate even further," he told CNBC-TV18.
According to Balanco, the Nifty has unperformed significantly in dollar terms so far this year.
Data on SEBI and NSE showed foreign investors were net sellers of Rs 992 crore in Indian equities on Monday and Tuesday, despite the delay of GAAR provisions by a year, in a week marked by steep global risk aversion.
The rupee opened lower on Wednesday as renewed concerns about the euro zone battered riskier assets, setting up the prospect of continued intervention from the RBI.
Balanco says the Indian currency could move to 56-58 versus the dollar if the 54 level does not hold.
Banking stocks have played a major role in the sharp fall in markets. Investors have been selling banking stocks, especially public sector banks, over renewed asset quality concerns.
Balanco believes the Bank Index could retest its late 2011 lows.
The fall in Europe and the US markets amid political uncertainty in Greece had its affect on Asian market as well. Analysts said that investors were worried that political wrangling may delay the process of solving the EU's debt crisis.
CLSA sees 20% downside risk in Asian markets, Balanco informed.
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