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Bears took control of D-Street after a positive start on Tuesday and pushed the index towards key short-term moving averages such as 5-days exponential moving average (DEMA), 20-DEMA, and 50-DEMA.
The index formed a bearish candle after a strong rally seen in the previous three trading sessions. The index rose from 10,034 levels to 10,329, which translates into a gain of nearly 300 points.
Uncertainty around US Federal Reserve policy outcome due on Wednesday, as well as a sharp rise in crude oil prices today on the back of the North sea pipeline outage, led to some profit booking in markets.
The index is still trading above its crucial short-term moving averages. Analysts advise investors to tread with caution as market awaits triggers for a move on either side. A Hammer like pattern formed in the previous trading sessions gave us a clue that the momentum could be waning.
The Nifty50 which opened at 10,324.90 rose marginally to an intraday high of 10,326.10 but then bears took control and pushed the index below 10,300. It hit an intraday low of 10,230 before closing the day at 10,240, down 82 points.
“In line with our expectations, Nifty50 witnessed profit booking as it lost close to 100 points before signing off the day with a strong bearish candle. Any follow through sell-off in next trading session with similar strength shall put the entire pull back rally from the lows of 10033 in jeopardy,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
In between a minor support is placed in the gap zone of 10195 – 182 registered on 8th December. As the market is heading for an important event, a best-case scenario for next two days can be listless trading sessions whereas a strong follow-through selloff shall drag it down towards 10050 and may threaten to breach the recent low of the current pullback rally.
India VIX moved up by 7.84 percent at 15.26. Rising Volatility is ruling out for any smooth ride in the market and expecting swings to continue going forward for next coming sessions.
On the options front, maximum Put open interest was seen at 10,000 followed by 9,800 strikes while maximum Call OI was seen at 10500 followed by 10400 strikes.
“We have seen fresh Put writing at 10000 strikes while Call writing is seen at all the strikes from 10300 to 10700,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“Nifty formed a Bearish Engulfing and a candle similar to Bearish Belt Hold on the Daily chart as bears were having the tight grip on the market. Overall index has got stuck in the broader trading range of 10033 to 10409 and no trading at the middle of the band,” he said.
Taparia further added that on an immediate basis, support is seen at 10178 while hurdle at 10330. If Nifty manages to moves beyond this zones then only we could see further momentum in the market towards 10409 or 10033 in next coming sessions, he said.
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