The Nifty gave up most of the previous session's gains to end a percent lower on January 30, with some banking names and other heavyweights coming under pressure ahead of the interim budget.
The index started on a positive note but failed to hold on to the gains and extended losses as the day progressed. It ended 215.5 points down at 21,522.
It formed a long bearish candlestick, which resembled a dark cloud cover pattern, on the daily charts, indicating a bearish reversal pattern.
"The daily chart indicates the formation of a Dark Cloud Cover, implying a bearish outlook in the near term," Rupak De, senior technical analyst at LKP Securities said.
If the index fails to hold 21,500 in the coming sessions, it can drop to 21,300.
On the higher side, 21,800 is expected to be a key hurdle. If the index manages to go past it, the index can move to 22,000 in the short term.
The hourly and the daily momentum indicators have a negative crossover, which is a sell signal.
Both price and momentum indicators are suggesting weakness. “Considering the upcoming budget event, during the week, the Nifty is likely to consolidate within the range 21,200–22,000 from a short-term perspective," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.
The options data indicates 21,700-21,800 as the resistance zone, with immediate support for the index at 21,500 and 21,000.
On the weekly options front, 22,500 strike owned the maximum Call open interest, followed by 21,700 and 22,000 strikes, with meaningful Call writing at 21,700 strike, then 21,800 strike.
On the Put front, the maximum open interest was at 21,000 strike, followed by 21,500 strike and 20,500 strike, with writing at 20,700 strike, then 20,500 strike and 21,000 strike.
Bank Nifty
The banking index also came under selling pressure and closed 75 points lower from the previous close at 45,368.
It formed a bearish candlestick with upper and lower shadows on the daily scale, indicating volatility.
It has been facing resistance at around 45,500 for the last two days.
For a sustained movement towards 46,000, the index needs to convincingly break this resistance, which coincides with the highest open interest on the Call side, Kunal Shah, senior technical & derivative analyst at LKP Securities said.
The immediate support on the downside is at 45,000, and a breach can intensify selling pressure, with the index declining to 44,700-44,500 levels, he said.
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