The Nifty50 remained under pressure throughout the session and closed lower for two days in a row on January 3, dented by a correction in technology and metal counters. Amid the downtrend, the index managed to hold on to 21,500, which is the immediate support for the index. If it gets broken, then 21,300 (low of the previous week's candle)-21,250 (20-day EMA - exponential moving average) will be the next immediate support, whereas, on the higher side, the 21,600-21,800 is expected to act as a hurdle zone, experts said.
The Nifty50 opened flat at 21,661 and traded lower for the day to hit a day's low of 21,500.35 amid volatility. Finally, the index closed with 149 points losses at 21,517 and formed a long bearish candlestick pattern on the daily charts, with making lower highs and lower lows for yet another session.
"A long negative candle was formed on the daily chart, which has placed it at the edge of breaking below the immediate support of 10-day EMA (21,530), which was offering support for the Nifty for the past two months. This is not a good sign," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
He feels the short-term trend of Nifty continues to be negative. "A decisive move below 21,500 levels could open the next downside of 21,255 (20-day EMA) and the next 20,980 levels in the near term. Immediate resistance is placed at 21,670," he said.
Rupak De, senior technical analyst at LKP Securities also feels the prevailing sentiment appears weak, and if the index continues to drop below 21,500 in the upcoming days, it could potentially exacerbate the negative sentiment, especially with expectations of substantial unwinding by Put writers below 21,500.
On the weekly options front, the maximum Call open interest was visible at 22,000 strike followed by 21,600-21,700 strikes with Call writing at 21,600 strike and then at 22,000 and 21,500 strike, while on the Put side, the maximum open interest was seen at 21,500 strike followed by 21,000 strike and 21,400 strike with writing at 21,500 strike and then 21,400 strike.
The above options data also indicated that 21,500 is an important level for further direction in the Nifty 50, with immediate resistance at 21,600-21,700 levels, and support at 21,400.
Bank Nifty
The Bank Nifty remained below the 48,000 mark and closed with 57 points loss at 47,705. The banking index has formed a bearish candle with a long lower shadow on the daily charts, indicating buying interest visible at lower levels, but the formation of lower highs and lower lows for the fourth consecutive session suggested the selling pressure is presented at higher levels.
"Now it has to cross and hold above 47,777 level to make an up move towards 48,000 and then at 48,250 level, while a hold below the same could see some weakness towards 47,500 and then 47,250 zones," Chandan Taparia, senior vice president | analyst-derivatives at Motilal Oswal Financial Services said.
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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
