F&O Manual | Bears take over as Nifty breaks 19,800, support at 19,750

Indian benchmark indices witnessed another session of strong selling on September 21.

Indian benchmark indices traded lower on September 21, mirroring the weak trend across global markets after the US Federal Reserve hinted at higher interest rates for a longer duration.

The Fed's hawkish tone despite a pause on rate hikes dented sentiment and unleashed the bears. The Indian market extended its slump from the third session, with the Nifty even slipping below 19,750 briefly.

Around noon, the Sensex was down 629.51 points, or 0.94 percent, at 66,171.33, and the Nifty was down 170.60 points, or 0.86 percent, at 19,730.80. Declines outnumbered gainers, as 1,368 shares rose while 1,631 fell and 115 remained unchanged.

The bars reflect changes in open interest (OI) during the day. The red show call option OI and the green put option OI

The options data shows that call writers came heavy as they accumulated maximum positions across 19,800 followed by 19,750 strikes. Bulls also tried to defend the Nifty by turning active around 19,750 and 19,700 strike prices.

"There has been a negative crossover of the Relative Strength Index (RSI) and Stochastic RSI indicators, and the price is trading below the 10-day exponential moving average (EMA) positioned at 19,935, which suggests further declines. Immediate support for the Nifty is seen at 19,750, while resistance is observed at 20,000," said Deven Mehata, Equity Research Analyst at Choice Broking.

Follow our live blog for all the market action

The Nifty Bank index was also under pressure, declining over a percent to break below the 45,000 mark. Tracking the fall in the banking index, analysts now peg support for Nifty Bank at around 44,800, which happens to be a key pivot, with a breach having a potential to trigger more selling pressure.

In view of the technical trends emerging out of the Nifty and the Nifty Bank, Mehata suggested investors adopt a prudent, stock-specific approach given the absence of clear trends.

Among individual stocks, financial and automobile names, Apollo Tyres, M&M, Bajaj Finserv, ICICI Bank, Hero Motocorp and M&M Financial saw heavy addition of short positions.

On the flipside, MCX saw an aggressive long buildup, as volume in the counter surged over threefold to a one-week high. Adani Ports and Berger were other stocks to see the addition of long positions.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.