The Nifty extended losses for the second day on March 24 on some last-hour selling, some surprise amendments to the finance bill 2023, which was passed by the Lok Sabha, that hit investor sentiment and mixed global cues.
The Nifty opened flat but went past 17,100 amid volatility early in the day but selling pressure in the later part of the session saw the index close 132 points down at 16,945.
The index formed a bearish candlestick on the daily as well as weekly charts, with the momentum indicator relative strength index (RSI) showing a bearish crossover.
Hence, the recent low of 16,800 is expected to be crucial on the downside. If the index slips below it, a further correction toward 16,500, which has the second-highest open interest build-up on the Put side, is likely. On the upside, 17,200 remains a key hurdle, experts said.
For the week, the index was down nearly a percent, extending the downtrend for a third straight week.
"The Nifty slipped below the crucial level of 16,950 as the bears gained control of the market. Furthermore, the Nifty fell after a few days of consolidation, indicating an increase in bearish bets. The momentum indicator RSI is in bearish crossover," Rupak De, Senior Technical Analyst, LKP Securities, said.
In the short term, the index may slip to 16,750. On the higher end, resistance is visible at 17,200, he said.
On the monthly options front, the maximum Call open interest was at 18,000 strike followed by 17,100 strike, while the maximum Put OI was at 17,000 strike, then 16,500 strike.
Call writing was seen at 17,000 strike, followed by 17,100 strike, while Put writing was seen at 16,800 strike then 17,000 strike. As per options data, the Nifty can see a trading range of 16,700-17,200 in the near term.
Banking index
The Bank Nifty was also under pressure, falling 222 points to close at 39,395. It formed a bearish candlestick with long upper shadow on the daily charts, indicating profit booking at higher levels.
For the week, the index closed half a percent down.
"Now till it holds below 39,500 levels, weakness could be seen towards 39,000 and 38,888 levels, whereas on the upside, hurdles exist at 39,750 and 40,000 zones," Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services, said.
Volatility was up after declining for the previous three sessions. India VIX, which indicates expected volatility over the next 30 days, was up by 5.17 percent to 15.24.
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