The Nifty50 lost all its previous three-day gains on December 15, the weekly expiry day, and closed with more than a percent loss while taking support at a weekly low of around 18,350, which can be crucial in the coming session. The Fed rate hike of 50 bps was as expected, but signalling more rate hikes going ahead caused selling pressure across global counterparts.
The index has also negated higher highs and higher lows seen in the previous two sessions and formed a long bearish candle on the daily charts. If we look at three days' performance, then the index seems to have formed an Evening Star kind of pattern on the daily charts, which is a bearish reversal pattern generally getting formed in an uptrend, indicating more downside in days to come.
Hence, the sentiment temporarily might have turned negative, which has to take support at 18,350 and if the said support gets broken, then 18,300 is expected to be crucial support, whereas the 18,500-18,700 is likely to be a hurdle area for the Nifty, experts said.
The Nifty50 opened lower at 18,614 and remained under pressure throughout the session to hit a day's low of 18,388. The index fell 245 points to close at 18,415.
"Technically, Nifty witnessed lower highs with closing below 20-DMA (18,576) with a big red bar which is a bearish sign however 18,325-18,250 is an immediate support zone that bulls will try to protect. 18,100 and 18,000 will be the next important support levels," Santosh Meena, Head of Research at Swastika Investmart said.
On the upside, Meena feels 20-DMA will now act as a key hurdle; above this, the bearish setup will nullify and the market may resume its bullish momentum. 18,730-18,800-18,888 will be the next resistance levels, the market expert said.
Options data suggested that the Nifty50 may trade in a range of 18,200 to 18,650 levels in coming sessions. We have seen maximum Call open interest at 19,000 strike followed by 18,800 strike with Call writing at 18,800 strike then 18,600 strike.
The maximum Put open interest was seen at 18,000 strike followed by 17,500 strike, with marginal Put writing at 18,200 strike and then 18,100 strike.
India VIX was up by 6.57 percent from 12.89 to 13.73 levels. Volatility spiked from lows as the market reacted sharply on the negative side after a long time but overall it has been hovering at lower levels from the last two months, which may keep supporting bulls, experts said.
After opening lower at 43,940, Bank Nifty turned volatile and largely held on to the 44,000 mark but in late morning deals, it has broken that crucial mark and corrected up to 43,379 before closing the session at 43,498, down 551 points.
The banking index has formed a long bearish candle on the daily charts and also formed an Evening Star kind of pattern in its uptrend, indicating more weakness in coming sessions. "Now, till it holds below 43,750 level, weakness could be seen towards 43,250 and 43,000 levels, whereas hurdles are intact at 43,750 and 44,000 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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