The Nifty50 traded down for the fourth consecutive on October 22, as auto, FMCG, IT, metal and pharma sectors took a hard knock falling up to 3 percent.
The index opened higher at 18,230.70 to touch the intraday high of 18,314.25 but failed to hold on to the gains. Renewed selling pressure in the afternoon pulled the index down to 18,034.35 before it recovered to close 63.20 points at 18,114.90.
The index formed a bearish candle on the daily as well as weekly charts. For the week, the index fell 1.2 percent.
Considering the fact that the Nifty has reached its critical support with the four-day down move, traders should remain neutral for the day, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in said.
"The key takeaway, from the highs of 18,604, can be the fact that intraday recovery attempts of last three trading sessions were attracting renewed selling pressure, hinting that the bears are trying to gain upper hand,” he said.
The four days of selloff dragged the Nifty to critical support placed around 21-day exponential moving average whose value is placed around 17,950 levels, Mohammad said.
If the weakness persists, the Nifty should ideally find some support from where a pullback attempt can be expected.
In that scenario, some kind of consolidation with positive bias can be expected but a breakdown below 17,950 on a closing basis can test 50-day simple moving average, whose value is placed around 17,400, he said.
On the option front, maximum Put open interest was seen at 17,500 followed by 18,000 strike, while maximum Call open interest was seen at 18,200 followed by 18,500 strike.
Call writing was seen at 18,300 then 18,200 strike, while minor Put writing was seen at 18,000 then 17,500 strike. The data indicates an immediate trading range of 17,900- 18,400 for the Nifty.
India VIX fell further by 2.74 percent from 18.03 to 17.54 levels.
The banking index remained strong for the second straight session. It opened higher at 40,192.65 and hit a record high of 40,587.35, driven by private banks.
The index closed 293.50 points higher at 40,323.70. The index formed a bullish candle on the daily as well as the weekly charts. It gained 2.5 percent for the week.
"Now the Bank Nifty has to hold above 40,150 to witness an upmove towards 40,800 and 41,000, while on the downside, support shifted higher to 40,000 and 39,500 levels," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
According to Mohammad, if the index sustains above 40,000, it can head to 42,000.
On stocks front, Taparia said bullish setup was seen in Federal Bank, TVS Motor, AU Small Finance Bank, Godrej Properties, RBL Bank, HDFC, HPCL, Shriram Transport Finance, Axis Bank and Kotak Mahindra Bank.
Weakness was seen in IndiaMART InterMESH, Indiabulls Housing Finance, Vedanta, LIC Housing Finance, Info Edge, Biocon, Hindalco, Jubilant FoodWorks, Dr Lal PathLabs, Zee Entertainment Enterprises, Hindustan Aeronautics, Piramal Enterprises, PFC, L&T Technology Services, Indraprastha Gas, NMDC, Apollo Hospital, Glenmark Pharma, Tata Consumer Products, Mahanagar Gas and Voltas.
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