The Nifty50 erased all its previous session's gains and fell 1.5 percent on April 5 as a sharp spike in coronavirus cases in the country dented sentiment. All leading sectors, barring IT and Metal, witnessed selling pressure.
The index formed a bearish candle on the daily charts as the closing was lower than opening levels, though it witnessed some buying at lower levels.
As trend appears to have tilted in favour of bears, the possibility of index testing recent corrective swing low of 14,264 shall remain higher, said Mazhar Mohammad of Chartviewindia.
The Nifty50 opened lower at 14,837.70 and remained under pressure to hit a day's low of 14,459.50. The index settled at 14,637.80, down 229.60 points or 1.54 percent.
India VIX moved up by 6.163 percent from 19.98 to 21.21 levels. Spurt in volatility from lower levels is keeping the market volatile with selling pressure at higher zones, Chandan Taparia of Motilal Oswal Financial Services (MOFSL) feels.
"Albeit Nifty50 recovered around 180 points from its intraday low of 14,459 levels, it seems to have resumed its downswing as Nifty witnessed sharp downswing of 390 points with negative advance decline ratio which decisively skewed in favour of bears," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
Hence, strength in the index will not be expected unless Nifty registers a close above 14,850 levels and till then the trajectory of this market shall be on a slippery slope with initial targets of 14,459 levels, Mazhar Mohammad said.
As trend appears to have tilted in favour of bears, the possibility of index testing recent corrective swing low of 14,264 shall remain higher,the expert believes.
Therefore, for the time being, Mazhar Mohammad advises traders to avoid long side bets whereas aggressive traders with high risk appetite shall consider any bounce into the zone of 14,700 – 14,750 to create fresh positional shorts with a stop above 14,850 levels on a closing basis and look for an initial target of 14,450.
On options front, maximum Put open interest was seen at 14,000, followed by 14,500 strike while maximum Call open interest was at 15,000 followed by 16,000 strike. Call writing was seen at 15,000 and then 14,700 strike while Put writing was seen at 13,900 and then 14,300 strike. Option data indicated that the Nifty could see a wider trading range of 14,300 to 15,100 levels in the coming sessions.
Bank Nifty saw a gap down start at 33,649.15 and cascaded to 32,330 in the initial hour of the trade. The second half remained quite choppy and the day settled with massive losses of 1,179.20 points or 3.48 at 32,678.80. It formed a bearish candle on daily scale with long lower shadows.
"Now till it remains below 33,333, weakness and underperformance could continue for the downside move towards 32,000 and 31,500 while on the upside, hurdles are seen at 33,500 and 34,000 levels," said Chandan Taparia, Vice President, Retail-Research at Motilal Oswal Financial Services.
On stocks front, bullish setup was seen in SAIL, Jindal Steel, HCL Technologies, Adani Enterprises, Dr Lal PathLabs, JSW Steel, Infosys, TCS, NMDC, Shree Cement, Britannia Industries and Adani Ports while weakness was seen in United Breweries, PVR, IndusInd Bank, Bajaj Finance, M&M Financial, DLF, RBL Bank, Eicher Motors, InterGlobe Aviation, M&M, HDFC Bank, Escorts and Hero MotoCorp, Taparia added.