After opening sharply higher, the Nifty50 squandered the gains to close lower on April 20. Weak global cues and the possibility of Maharashtra tightening restrictions further weighed on the sentiment.
The Nifty opened at 14,526.70, also the day's high, but gradually erased gains and slipped into the red in the last hour to hit the day's low of 14,207.30. The index settled at 14,296.40, down 63.10 points.
The index broke the crucial 14,300-mark and formed a bearish candle that resembled the Bearish Belt Hold pattern on the daily chart.
A 'Bearish Belt Hold' pattern is formed when the opening price becomes the highest point of the trading day and the index declines throughout the session making up the large body. The candle will either have a small or no upper shadow and a small lower shadow.
Intraday traders should go short below 14,200 and look for a target of 13,990 levels, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
The market will remain closed on April 21 for Ram Navami.
"In line with our expectations, Nifty50 witnessed selling pressure, from the word go, as it opened into the bearish gap zone registered on April 19. Moreover, today's bearish candle which resembles a Bearish Belt Hold formation also broken the critical support of its 100-day moving average, which offered support to the Nifty in the last couple of trading sessions," Mohammad said.
Unless the index swiftly registers a close above 14,300 in the next session, there is a distinct possibility of it slipping towards 13,950, he said.
If bulls manage a close above 14,300, then sideways move with slightly positive bias can be expected. "Even in that case, upsides, for the time being, remains capped at 14,530 levels," Mohammad said.
India VIX fell by 0.24 percent from 22.48 to 22.42 levels. "India VIX needs to hold below 20 levels to again attract bullish stance in the market," Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services, said.
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 14,500 strike. Call writing was seen at 14,500 then 14,700 strike, while Put writing was seen at 13,500 and 13,900 strike.
The data indicates that the Nifty50 could see a wider trading range of 14,000 to 14,600 in the coming sessions.
The Bank Nifty opened gap up at 31,568.95 but witnessed weakness throughout the day and moved in a negative to rangebound manner. It failed to hold above 31,500 and settled the day with losses of 95.70 points at 31,112.70.
The index formed a bearish candle on the daily scale. "The Bank Nifty has to hold above 31,250 for an upmove towards 31,500 and 32,000, while on the downside, support can be seen at 31,000 and 30,500 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
On the stock front, a bullish setup was seen in ICICI Prudential Life Insurance, Jindal Steel, Apollo Hospitals, Dr Reddy's Labs, Bajaj Finserv, Tata Consumer, Jubilant Foodworks, Lupin, M&M, Aurobindo Pharma and Page Industries. Weakness was seen in UltraTech Cement, HCL Technologies, HDFC, Grasim, HUL, Eicher Motors, Gail and DLF, he added.