The Nifty traded lower for the seventh day but managed to narrow losses in last-hour buying to close 73 points down at 17,393 on February 27.
The index, which opened lower and remained under pressure throughout the session, formed a bearish candle with a long lower shadow, which resembled Hammer pattern formation on the daily charts.
A hammer pattern in the downtrend generally indicates a bullish reversal. The index, which slipped below the 200-day moving average (17,376), the budget day's low of 17,353 and sank to the day's low of 17,299, managed to hold them at close, with both acting as good support levels.
For the index, 17,500-17,600 will act as resistance. The level of 17,300-17,350 will act as a support zone and a break on either side will give a clear direction to the market, experts said.
Technically, the chart is in a make-or-break zone and one needs to be prepared for any scenario. “However, the formation of the ‘Hammer’ candle on the technical chart that, too, around 200 SMA (simple moving average) could be seen as a ray of hope for a reversal from the ongoing selling saga," Osho Krishan, Senior Analyst-Technical & Derivative Research at Angel One said.
Follow-up buying with a close above the day’s high of 17, 451 would authenticate the trend reversal in the near term, he said.
A closure below 17,350 will drag the index to 17,200-17,100 zone, while on the higher end, 17,550-17,600 is likely to be the resistance, he said.
On the weekly options data, the maximum Call open interest was at 17,600 strike, followed by 18,000 strike and 17,500 strike, with Call writing at 17,400 strike, then 17,500 and 17,600 strikes.
On the Put side, the maximum open interest was at 17,000 strike, followed by 17,400 strike and 17,200 strike, with writing at 17,400 strike, then 17,000 strike.
The data indicates the Nifty’s immediate range will be 17,250-17,550.
India VIX, the fear index, fell 2.18 percent from 14.19 to 13.88, continuing the downtrend for third straight session, giving some kind of support to the market.
Banking index
The Bank Nifty, which has the highest weight in Nifty, opened lower at 39,820 and hit an intraday low of 39,745.
It, however, recovered quickly and remained in an uptrend in the rest of the session to hit an intraday high of 40,371.
The index took support at the 200-day exponential moving average (40,009 and climbed nearly 400 points to 40,307, forming a Bullish Engulfing candle, which is a bullish reversal pattern, on the daily scale.
It outperformed the broader markets. "Now, it has to hold above 40,250 levels for a bounce towards 40,500 then 40,750 levels, while on the downside, support is expected at 39,800 then 39,600 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
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