The market grappled with intense selling pressure in the afternoon, with Bank Nifty plummeting 1,600 points from the day's high to trade around the psychologically vital level of 45,000.
Once again heavyweight HDFC Bank triggered the slide, falling 3 percent. Other banking stocks also were in the red. India VIX, a measure of expected volatility in the market, want past the 15-level mark, indicating a choppy market up ahead.
Here's what experts are saying
According to Rupak De, Senior Technical Analyst, LKP Securities, "Bank Nifty has slipped below its recent consolidation, signifying an increase in bearish bets. The sentiment might remain negative in the short term, favouring a sell-on-rally approach for Bank Nifty bears as long as it stays below 45,500. Meanwhile, support is positioned at 44600-44500."
The index breached major support levels and is also displaying downside momentum. "I’m not anticipating an immediate recovery today or tomorrow. The market is likely to stay bearish in the coming days," derivatives trader Shijumon Anthony said.
As per Akshay Bhagtwat, senior VP Derivative Research, JM Financial Bank Nifty resumed its weak trend of the January series, starting the week on a sour note.
After four days of sideways consolidation, it broke its recent swing low at the 45,500 support. On the downside, the support is at 44,800 and then 44,000, while 46000 is building up as resistance, he said.
"Ahead of the January monthly expiry, the options chain matrix has noted a shift of Open Interest (OI) in Call options selling bets from 47,000 to 46,000, hinting at 46,000-46,200 building up as resistance. Put writers are shifting their OI support base to lower strikes at 44,000 as selling pressure intensified in the day trading session," Bhagwat added.
The Bank Nifty index has triggered breakdown of Head and Shoulder pattern, suggesting short-term weakness, said Avdhut Bagkar, Derivatives & Technical Analyst at StoxBox. The bias has shifted in negative terrain, with bears taking control of the trend.
“Going forward, every reversal towards 46,800 shall result in addition on bearish positions, and a hammering in banking related stocks, " Bagkar said.
To reclaim the positive bias, the index must hold the slide around 44,650, which is its 200-simple moving average (SMA). If fails to do so, medium-term weakness may engulf the price action, he said.
"On a broader perspective, 47,200 – 46,600 remains the selling pressure zone, and the current probability of Bank Nifty to overcome this range remains dubious,” Bagkar said. The weakness appears to be moving towards 43,500 – 42,800, he said.
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