The Nifty remained under pressure for the second consecutive session on the back of weak global cues and closed below the psychologically important 14,700-mark on May 12. Concerns over a hike in global interest rates and bond yields due to rising commodity prices and inflationary pressure also weighed on the sentiment, experts said.
The Nifty opened lower at 14,823.55 and hit an intraday high of 14,824.05. The index remained under pressure throughout the session and hit the day's low of 14,649.70 before signing off the session 154.30 points, or 1.04 percent, lower at 14,696.50.
The index formed a bearish candle that resembled Bearish Belt Hold kind of pattern on the daily charts, as the opening and intraday high levels were almost the same. If the index breaks 14,649 in the coming session, it could break its 100-day simple moving average.
A 'Bearish Belt Hold' pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the day making up the large body. The candle will either have a small or no upper shadow and a small lower shadow.
Intraday traders should short below 14,650 and look for a modest target of 14,570 by placing a stop above intraday high, said Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
"Weakness appears to be getting more pronounced in the Nifty50 index as it not only witnessed a follow through selling but also closed below its 50-day simple moving average by damaging the psychology of most bullish traders," Mohammad said.
In the next trading session, if the index slips below 14,649, it will head to test its 100-day simple moving average, whose value is placed around 14,565. A close below the said average can result in a sharp cut as the level offered significant support to the index on a closing basis, he said.
In such a scenario, the initial target can be 14,300 but a retest of the recent corrective swing low, at aroud 14,150, can't be ruled out, he said.
Upsides in the near term shall remain capped around 14,825 levels, whereas a close above 14,850 can be considered as an initial sign of strength, he said.
The market will remain shut on May 13 for Ramzan Id.
India VIX moved up by 1.26 percent from 19.83 to 20.08 levels. The options data suggests the Nifty could see a wider trading range of 14,400 to 15,000 in the coming sessions.
On the options front, maximum Put open interest was seen at 14,000 followed by 13,500 strike, while maximum Call open interest was seen at 15,000 followed by 14,800 strike. Call writing was seen at 14,800 and 15,200 strike, while Put unwinding was seen at all the immediate strikes with Put writing at 14,700 strike.
The Bank Nifty opened negative at 32,717.65 and failed go past 32,750. The index remained in negative terrain and hit an intraday low of 32,352.30. It closed 419.90 points or 1.28 percent lower at 32,452.30 and formed a bearish candle on the daily charts.
"It recently failed to surpass key hurdle of 33,333 zones and now bears started to pull the index to lower zones. It formed a lower top - lower bottom on the hourly scale. Now it has to cross and hold above 32,750 to witness an upmove towards 33,333, while on the downside, support is seen at 32,250 and 32,000 levels," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On the stock front, Godrej Consumer Products, Tata Chemicals, Tata Motors, Cadila Healthcare, NMDC, SBI, Motherson Sumi, Lupin, Maruti Suzuki and Power Grid Corporation witnessed bullish setup. Weakness was seen in Voltas, Tata Steel, Jindal Steel, IndusInd Bank, Hindalco, Mahanagar Gas, HUL, Muthoot Finance, Kotak Mahindra Bank, Axis Bank, M&M Financial, Reliance Industries and Ramco Cement, he added.Disclosure: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.