The Nifty50 snapped a two-day winning streak and lost half a percent following nervousness among Asian peers ahead of the interest rate decision by the Federal Reserve scheduled to be announced tonight.
The index has taken support at the 17,700 mark following a rangebound trading session on September 21. Hence, if the said level holds in the coming session, then bulls may try hard to take the Nifty50 beyond last Friday's high (17,820), whereas on the other side, 17,500 and 17,400 will remain crucial supports, experts said.
The Nifty50 has formed a small-bodied bearish candlestick pattern on the daily charts.
All the sectoral indices, barring FMCG, closed in the red, with Metal and Pharma being the biggest losers. The broader markets also witnessed selling pressure and corrected more than benchmarks. The Nifty Midcap 100 index was down seven-tenth of a percent and Smallcap 100 index fell 1 percent.
The Nifty50 started off the day down at 17,766 and remained in negative terrain for a major part of the session amid volatility, to hit an intraday low of 17,664. The index fell 98 points to close at 17,718.
"On the daily chart, the index has fallen below the falling trend line suggesting a waning bullishness. The daily RSI (relative strength index) is in a bearish crossover on the daily chart indicating a falling momentum," Rupak De, Senior Technical Analyst at LKP Securities said.
De thinks the trend for the near term may remain sideways to positive as long as the index closes above 17,700. However, a decisive fall below 17,700 may trigger a correction in the market.
On the lower end, below 17,700, Nifty may fall towards 17,500-17,350, whereas on the higher end, resistance is visible at 17,850-17,900, the market expert said.
The volatility remained high ahead of policy meetings. Unless and until the volatility cools down significantly, the bulls remain uncomfortable holding the fort at Dalal Street. India VIX, which measures the expected volatility in the market, was up by 2.8 percent to 19.33 levels.
The options data indicated that the Nifty50 could see an immediate trading range of 17,500 to 18,000 levels.
We continued to see maximum Call open interest at 18,000 strike followed by 18,500 strike while there was maximum Put open interest at 17,500 strike then 17,000 strike.
The Call writing was seen at 17,800 strike followed by 18,000 strike while Put writing was seen at 17,800 strike 17,600 strike
Bank Nifty also opened lower at 41,283 and moved in a negative to rangebound manner for the first half of the session but then witnessed some strength in the latter half. Finally, the banking index settled with 265 points loss at 41,203 and formed Doji kind of indecisive pattern on the daily charts.
The index has to cross and hold above 41,250 levels to continue the positive momentum towards 41,500 and a lifetime high of 41,840 zones while on the downside, support is seen at 41,000 followed by 40,750 levels, Chandan Taparia, 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.