The Nifty traded in a range in a volatile session where the bears got the better of the bulls and the index closed a percent lower. All sectoral indices, barring PSU Bank, closed in the red.
The index formed a bearish candle as the closing was lower than opening levels. The 100-day simple moving average, 14,486, is crucial for a downside, while 14,723 will be vital for an upside in the coming sessions, experts said.
Positional traders with a high-risk appetite can either short on pullback towards 14,600 or on breach of 14,460, look for initial targets of 14,200 levels, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
The Nifty50 opened higher at 14,687.25 and hit a high of 14,723.40 amid volatility. It fell sharply in the last hour to slip to the day's low of 14,461.50. It closed with losses of 137.70 points at 14,496.50.
To retain the positive bias, the index must hold above 14,416 in the next one or two sessions as a breach of the level would embolden the bears to drag the Nifty to the recent corrective swing low of 14,150, Mohammad said.
Meanhwile, "it is interesting to note that somehow bulls are managing to defend their 100-day simple moving average, at least on closing basis in this corrective/consolidation phase, whose value is placed around 14,486 levels. Hence, going forward, a close below the said average can be an early indication of a sharp slide in Nifty," he said.
If the Nifty manages to defend 14,461 in the next session, a mild pull back into the 14,600–14,650 can zone be expected, Mohammad said.
The sharp slide in the last hour indicated that the market would remain vulnerable to a selloff on pull back attempts, he said. Until the Nifty closes above 14,723, strength should not be expected in the near term, he said.
India VIX fell by 2.87 percent from 23.69 to 23.01 levels but this was the ninth session that it continued to hover around 23.
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 15,500 strike. Marginal Call writing was seen at 15,000 strike, while minor Put writing was seen at 14,000 strike.
The data indicates that the Nifty50 may see a wider trading range of 14,000-15,000.
The Bank Nifty opened gap up at 32,610.40 and corrected in the second half to breach 32,200. Even with the weakness, banking stocks outperformed the broader market. The Bank Nifty settled the day with losses of 195.50 points at 32,270.30.
It formed a bearish candle on daily scale with long upper shadow, which indicated sustained selling at the resistance of 33,000.
"The Bank Nifty negated its lower highs-lower lows formation of the last two sessions but failed to surpass 50-DEMA. Now, it has to hold above 32,250 to witness an upmove towards 33,000 and 33,333, while on the downside, support is seen at 32,000 and 31,500," said Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services.
On the stock front, bullish setup was seen in Bank of Baroda, GAIL, Marico, SRF, Bharat Forge, HPCL, ONGC, Mahanagar Gas, Bajaj Finance and Vedanta. Weakness was seen in Tata Chemicals, Tata Consumer Products, Jubilant Foodworks, Cipla, M&M Financial, Reliance Industries, HDFC, Biocon, MRF, Titan and ITC, he added.
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