The Nifty ended lower for a third straight session on April 16, tracking weakness in global markets as worries over the worsening situation in West Asia weighed on sentiment.
After opening lower, the index sank to the day’s low of 22,079. It narrowed the losses later in the session to end 125 points lower at 22,148.
It formed a small bullish candlestick with upper and lower shadows, which resembled the spinning top pattern, raising the possibility of bulls making a comeback, though the overall trend favours bears.
The level of 22,000 may act as a crucial support, which coincides with the upward-sloping support trendline. A break of it can pull the Nifty sharply lower, while on the higher side, 22,260, the previous day’s low, may act as the immediate hurdle, experts said.
"Technically, today's market action signals range-bound action in the market with weak bias. Normally, such formations post reasonable decline indicate an upside bounce from the lows," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
The Nifty is placed near the crucial support of the ascending trend line, as per the weekly chart, and near the lower end of an ascending channel on the daily chart at around 22,000. Hence, there is a possibility of a bounce in the short term, he said.
The short-term trend remains weak. But "having placed near the cluster support of around 22,000 levels, one may expect an upside bounce from the lows in the coming sessions. Immediate resistance is at 22,260 levels," he said.
On the weekly options front, the maximum Call open interest was at the 22,500 strike, followed by 22,700 and 22,600 strikes, with meaningful Call writing at the 22,200 strike, then 22,300 and 22,500 strikes. On the Put side, the 22,000 strike owned the maximum open interest, followed by 21,500 and 22,200 strikes, with writing at the 21,900 strike and then 21,500 and 22,100 strikes.
The data suggests that the Nifty may face strong resistance at 22,500 and immediate resistance at 22,200-22,300, with support at 22,000.
Bank Nifty
The banking index, too, mirrored the benchmark to close 288 points down at 47,485. The index formed a spinning top pattern on the daily charts, indicating the possibility of a bullish reversal.
The index closed above its 20-day moving average (placed at 47,467) despite a shaky start. "If the index sustains above the 47,500-47,400 range, it could experience a pullback towards the 48,000 level," Kunal Shah, senior technical & derivative analyst at LKP Securities said.
If it closes below 47,300, the index may face further selling pressure and slip towards 46,500, he said.
Volatility was up. India VIX, the fear gauge, closed at 12.61, up 1.18 percent.
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