The Nifty50 lost initial gains and slipped below 11,700 before signing off the day with a 1.3 percent loss on October 28 a day ahead of the expiry of October futures and options contracts. Banking & financials, IT and FMCG stocks led the losses.
Traders remained worried about global cues, including rising infections in the US and Europe, and uncertainty over US presidential elections.
The index formed a big bearish candle on the daily charts as closing was much lower than opening tick but given that the index is still in the 11,650-12,050 range, experts expect the consolidation to continue in the coming days.
Traders should remain neutral on the long side whereas intraday traders can consider shorting below 11,660 for a target placed around 11,550 levels, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
India VIX moved up by 4.86 percent from 22.19 to 23.28 levels, which needs to cool down below the 20-mark for market stability.
The Nifty50 started off positive at 11,922.60 and hit an intraday high of 11,929.40 but wiped out losses in the initial hour. It slipped below 11,700 to hit the day's low of 11,684.85. The index closed at 11,729.60, down 159.80 points or 1.34 percent.
"The bears appear to have struck once again as the bulls failed to get past the higher end of the trading range present around 11,950 levels as the Nifty50 erased previous trading session’s gains with a bearish candle. However, the larger trend still continues to remain sideways inside 12,025 – 11,661 band," Mohammad said
For any meaning full downswing, the Nifty needs a breakdown below 11,661 on a closing basis, Mohammad said. On such a breakdown a range target of around 11,300 can be expected, but considering the steep recent upswing, a bigger downside target towards the 11,000–10,900 zone can't be ruled out, he said.
Meanwhile, upsides shall continue to remain capped around 11,950 whereas a close above 11,930, can be considered as an initial sign of strength for bulls, he feels.
On the options front, maximum Put open interest was at 11,500 followed by 11,000 strike, while maximum Call open interest was at 12,000 followed by 11,900 strike. Call writing was seen at 12,000 then 11,800 strike while Put writing was seen at 11,450 then 11,600 strike.
The options data indicates that the Nifty could see a wider trading range of 11,600-11,900.
The Bank Nifty opened flat and failed to hold above the immediate hurdle of 24,750 to drift lower to hit an intraday low of 24,057.95. It witnessed a decline of around 700 points from higher levels and negated the bullish price structure of the previous session.
The index lost 537 points, or 2.17 percent, lower to 24,232.50 and formed a bearish candle on the daily scale.
"The Bank Nifty has still been making higher lows from last five weeks. Now it has to hold above 24,250 to witness an upmove towards 24,750 while immediate key support is seen at 24,000-23,900 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Positive setup was seen in Marico, Siemens, Adani Enterprises, L&T, Havells and Maruti while weakness was seen in DLF, Mindtree, Indiabulls Housing Finance, Federal Bank, IndusInd Bank, IndiGo, SBI, Lupin, Sun Pharma and UBL, he added.