After a positive opening, Nifty50 dopped into the red for the majority of the session on May 14. The index showed some recovery from the day's low and closed moderately lower, extending the losing streak for the third consecutive day. All sectoral indices, barring FMCG, closed in the red.
The index formed a bearish candle resembling a Hammer pattern on the daily charts while forming a bearish candle on the weekly scale.
Experts feel 14,591, Friday's low is expected to act as a key level in the coming sessions, and if it holds the same, then there could rally towards recent highs.
The Hammer is a bullish reversal pattern formed after a decline. It consists of no upper shadow, a small body, and a long lower shadow.
Mazhar Mohammad of Chartviewindia advised traders to remain neutral on the long side whereas intraday shorting can be considered below 14,570 for a target of 14,420 levels.
India VIX moved up by 0.93 percent from 20.08 to 20.26 levels.
The Nifty50 opened gap up at 14,749.40 and hit a day's high of 14,749.65. It remained volatile for the rest of the session and settled the trade at 14,677.80, down 18.70 points.
"Nifty50 registered a Hammer formation as it smartly recoiled from the intraday low of 14,591 levels. Interestingly, this intraday bounce occurred after retracing 62 percent of its last leg of rally from the lows of 14,416 – 14,966 levels," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
Moreover, "today’s intraday low almost neared its 100-day simple moving average (14,576) before a bounce back. Hence, going forward, the level of 14,591 can be of technical significance in the near term and if Nifty manages to sustain above the said low then it can bounce towards the higher end of the trading range with an initial target of 14,890," he said.
Even a close observation of the last three weeks price action on weekly charts reveal that Nifty may be chalking out a consolidation range between 15,054 to 14,421 levels and it needs to emerge out of this trading range to witness a decisive move in either of the directions, he said.
On the options front, maximum Put open interest witnessed at 14,000 followed by 13,500 strike while maximum Call open interest was seen at 15,000 followed by 14,800 strike. Call writing was seen at 15,100 and 15,300 strike while Put writing was seen at 14,650 then 14,500 strike. Option data indicated that the Nifty could see a wider trading range of 14,400 to 15,000 levels for coming sessions.
Bank Nifty opened moderately higher at 32,495.15 and traded with negative to rangebound bias for most part of the day. Banking stocks pulled the index to day's low of 32,115.50 and it concluded the day with losses of 282.80 points at 32,169.50, forming a bearish candle on the daily charts.
"The index has to cross and hold above 32,500 to witness an up move towards 33,000 and 33,333 while on the downside support is seen at 32,000 and 31,750 levels," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
Among stocks, Asian Paints, UPL, ITC, Nestle India, Berger Paints, Colgate Palmolive, L&T, ICICI Prudential, Marico, Power Grid and Mcdowell Holdings witnessed bullish setup, while weakness was seen in Jindal Steel & Power, DLF, GAIL, Container Corporation, NALCO, Piramal Enterprises, Mahanagar Gas, IndusInd Bank, Exide Industries, L&T Finance Holdings, M&M, Havells and MRF, he added.