It was a Black Friday for the market as the Nifty50 fell 1 percent for a second consecutive session and closed below long-term moving averages on March 10. The correction in global counterparts ahead of US unemployment and non-farm payroll data (due later today), which will have more significance ahead of Federal Reserve meeting later this month, weighed on market sentiment.
The index opened with a sharp gap down at 17,444 and corrected up to 17,324 during the day. The index recovered from the said low but remained largely rangebound with a negative bias throughout session, and closed at 17,413, down 177 points or 1 percent.
The Nifty50 has formed bearish candle which resembles Hammer kind of pattern formation on the daily charts. Hammer formation in the downtrend generally signals a bullish reversal. It consists of no upper shadow, a small body, and a long lower shadow. The long lower shadow signifies the stock bounced back after testing its support, where demand is located.
For coming sessions, 17,300, the low of Friday, is expected to act as a support area and if the said levels get broken, then there could be further correction up 17,200-17,000 area, whereas 17,600 is expected to be crucial resistance area, which coincides with 200-day EMA (exponential moving average), experts said.
For the week, the index has seen Bearish Engulfing pattern formation on the weekly timeframe, indicating a negative sign. It lost 1 percent and erased all its previous week's gains.
"On the daily chart, the index has been falling within a downward-sloping channel, which again confirms the bearish trend. The 14-day moving average (17,552) and the 50-day moving average (17,825), are in the bearish crossover, with the index value remaining below both averages," said Rupak De, Senior Technical Analyst at LKP Securities.
"The sentiment remains bearish, and the market will remain in sell-to-rise mode until Nifty closes below 17,850. On the lower end, supports are placed at 16,950-16,750," Rupak said.
On the weekly Option front, we have seen maximum Call open interest at 18,000 strike, followed by 17,500 strike, with Call writing at 17,500 strike then 17,400 strike, whereas the maximum Put open interest was seen at 17,400 strike followed by 17,300 strike with Put writing at 17,400 strike then 17,300 strike.
The above Option data indicated a broader trading range for the Nifty50 may be 17,000 to 17,800 levels.
Bank Nifty also opened on a negative note by more than 450 points at 40,805 and remained under pressure for major part of the session. It ended the day with losses of 771 points or 1.9 percent at 40,485 as financial stocks underperformed the broader markets and resistances are gradually shifting lower.
The index formed a bearish candle on daily and weekly scales which suggests selling pressure is expected at higher zones. "Now till it holds below 40,800 levels, the weakness could be seen towards 40,100, then 39,750 levels, whereas on the upside hurdle is expected at 40,800 then 41,000 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
The volatility also increased to near 14 levels during the day, making the bulls uncomfortable. India VIX, the fear index, rose by 5.4 percent to 13.41 levels, from 12.73 levels.
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