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Technical View | Nifty forms bearish candle, experts say a breach of 15,385 will add to weakness

If the index manages to defend 15,182, a pull-back rally with initial targets of 15,700 is possible, market experts said

June 22, 2022 / 04:59 PM IST

The Nifty ended lower again on June 22 a day after rebounding strongly sharply, as selling across global counterparts and sectors weighed on sentiment. The index ended 225.50 points, or 1.44, percent, lower at 15,413.30

It formed a bearish candle on the daily chart as the closing was below the opening level. If the index breaks 15,385, the day's low, in the coming session, then it can slide to 15,183, the recent low, experts said.

"The Nifty50 is still sustaining above the bullish gap zone of 15,419 – 15,382 levels. Hence, unless the Nifty closes below 15,382 mark, weakness will not be confirmed and on such a close, the index can initially revisit the recent lows of 15,183 levels and below that weakness shall initially extend towards 14,900," Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

If the index manages to defend 15,182, a pull-back rally with initial targets of 15,700 is possible, the market expert said.

But considering strong moves of the last two trading sessions in the opposite directions, traders are advised to remain neutral. Intraday shorting opportunity will arise below 15,380 for a modest target of 15,200 levels, said Mohammad.

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Also read: Guessing when can Nifty find its bottom? BofA Securities has an answer

The broader market mirrored the benchmark. The Nifty midcap 100 and smallcap 100 indices slumped 1.6 percent and 1.4 percent. About five shares declined for every two advancing shares on the NSE.

Among sectors, Nifty metal was the biggest loser, declining nearly 5 percent. Bank, financial services, FMCG, IT and pharma dipped around a percent each.

India VIX, which indicates the expected volatility in the market, rose to 21.3, favouring the bears. It has to fall below the 20 mark for the market to stabilise, experts said.

Also read: As 85% stocks from BSE 500 trade below 200-day average, experts advise caution

On the options front, maximum Call open interest was seen at 16,000 strike followed by 16,500 strike, while there was maximum Put open interest at 15,500 strike followed by 15,000 strike.

The maximum Call writing was seen at 15,500 strike then 15,800 strike and Put writing at 15,500 strike then 15,400 strike.

The data indicates that the Nifty’s immediate trading range could be 15,200-15,600 in the coming sessions.

Banking index

The Bank Nifty has opened gap down at 33,052 and traded in a 350-point range. It closed 346 points lower at 32,845.

The banking index formed a small-bodied bearish candle on the daily frame and surrendered at higher zones.

Also read: Taking Stock | Back in the red, Sensex and Nifty down more than 1%; metals top drag

"Till it holds below 33,000-mark, weakness may be seen towards 32,500 levels, whereas upside resistances can be seen at 33,333 then 33,500 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Among F&O stocks, a negative setup was seen in NALCO, Vedanta, UPL, Hindalco, Tata Steel, Voltas, Alkem Laboratories, Muthoot Finance, Nippon Life, City Union Bank and IndusInd Bank.

However, Mahanagar Gas, InterGlobe Aviation, Hero MotoCorp, Indraprastha Gas, PVR, TCS, Divis Labs and Syngene International saw a negative setup, he added.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sunil Shankar Matkar
first published: Jun 22, 2022 04:59 pm
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