The Nifty ended lower on September 22, extending the downtrend for the second session after the US Federal Reserve went for another aggressive rate hike to curb inflation.
The index opened sharply lower at 17,609 and slipped to the day’s low of 17,532. The Nifty ended the session 89 points lower at 17,630.
As it recovered nearly 100 points from the day's low, the index formed a Doji pattern on the daily chart which indicates indecisiveness among the bulls and the bears about the future trend.
Range-bound trade is expected to continue as long as the index holds 17,400-17,500. A break of these levels can drag the index to 17,200-17,300, experts said. On the upside, 17,820 will act as a crucial hurdle.
The broader market, however, bucked the trend, outshining equity benchmarks. The Nifty midcap 100 and smallcap 100 indices gained third of a percent and six-tenth of a percent respectively despite indecisive breadth. About 991 shares declined against 985 advancing shares on the NSE.
"Technically, the Nifty has formed lower top formation on daily and intraday charts and closed below the 20-day SMA (simple moving average), indicating continuation of weakness in the near future," Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said.
The index has been consistently facing resistance at higher levels and at the same time, regularly taking support near 17,500 level.
For the traders, 17,500 and 17,700 would be the important level to watch out for and below 17,500, the index could slip to 17,400-17,350. A range breakout over 17,700 can push the index to 17,800-17,850, the market expert said.
The volatility index India VIX fell 2.63 percent to 18.82 levels, but needs to decline below 18 mark which can make the bulls comfortable, experts said.
On the options front, the maximum Call open interest was seen at 19,000 strike followed by 18,000 and 18,500 strikes, with Call writing at 19,000 strike then 17,700 & 18,500 strikes. The maximum Put open interest was seen at 17,000 strike followed by 17,500 and 16,500 strikes, with Put writing at 17,600 strike then 17,200 strike.
The data indicates the Nifty is expected to trade in the 17,500-18,000 range in the immediate term.
Banking stocks were largely responsible for the correction. The Bank Nifty opened lower by 300 points at 40,889 and hit an intraday low of 40,360.
The banking index remained under pressure throughout the session and closed 573 points down at 40,631, forming a bearish candle on the daily chart.
For the index, the immediate downside support is at 40,500 and a breach can see the index slide to 39,000, Kunal Shah, Senior Technical Analyst at LKP Securities said.
The Bank Nifty is trading in a tight range of 40,000-42,000 and a break on either side will give a direction to the index, the market expert said.
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