The Nifty50, after a day of sharp fall, started off the day on a positive note but erased most of the gains in the last hour of trade due to selling pressure at higher levels and settled flat on May 5, with volatility on the higher side.
Technology, select metal, and auto stocks supported the market, but select banks, FMCG, and pharma counters weighed on the sentiment.
The index closed lower than opening levels and hence formed a bearish candle on the daily charts. Experts say if the index sustains above Thursday's low of 16,623 levels in the coming days, then consolidation can be seen, while decisive breaking of 16,900 levels can take the index to above the 17,000-mark.
The volatility cooled off as the market surpassed two key important events including the US FOMC outcome and sudden RBI’s briefing along with a change in key interest rate but still stayed on the higher side. India VIX, the fear index, closed at 20.29 levels, down 7.24 percent. It needs to fall below 18 levels to bring stability to the market.
The Nifty50 opened sharply higher at 16,855 and climbed up to 16,946, but witnessed selling pressure and profit taking at higher levels and hence fell up to 16,652 intraday before closing with 5 points gains at 16,683.
"Albeit Nifty50 opened strongly it has given up all the gains to register a close in negative terrain. This sell-off from the intraday high of 16,945 levels is hinting at some kind of nervousness among bulls," Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia, said.
However, defending the last Thursday’s low of 16,623 is lightly positive for bulls, the analyst feels. Hence, he said if they manage to hold this level for the next couple of sessions then it can pave the way for sideways consolidation, between 16,623 and 17,132 levels.
According to the market expert, if the index breaches 16,623 levels, then initially it should slide down into the zone of 16,447 – 16,418 levels.
For the time being, he advised traders to remain neutral on the index but shorting can be considered in breach of 16,623 levels.
The wider trading range for coming sessions, indicated by the option data, for the Nifty remained unchanged at 16,400 to 17,000 levels due to higher volatility.
On the options front, maximum Call open interest was seen at 17,000 strike followed by 17,500 strike while maximum Put open interest was witnessed at 16,500 strike then 16,000. Marginal Call writing was seen at 16,800 strikes followed by 17,000 strikes while Put writing was seen at 16,500 strikes and then 16,700.
Bank Nifty opened positive at 35,705 and moved in a consolidative manner for the first half of the session. The second half witnessed weakness from highs as the index lost all its intraday gains and drifted from 35,935 to 35,134 levels.
The index formed a bearish candle on a daily scale and closed with losses of 31 points at 35,233. "Till it holds below 35,500 levels, weakness could be seen towards 35,000 and 34,750 levels whereas resistances are placed at 35,750 and 36,000 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
On the stocks' front, he said a positive setup was seen in Hero MotoCorp, Siemens, BHEL, ONGC, Tata Chemicals, Petronet LNGC, and Coromandel International.
However, weakness was seen in Can Fin Homes, MCX, Muthoot Finance, Bank of Baroda, Sun Pharma, DLF, Info Edge, Eicher Motors, UltraTech Cement, HDFC AMC, Exide Industries, Apollo Hospitals Enterprises, Dabur, InterGlobe Aviation, Bajaj Finserv, and Axis Bank.
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