The Nifty closed more than a percent lower on May 5 as heavyweight HDFC twins took a big knock amid fears of fund outflow post-merger.
After opening more than 100 points lower, the index remained under pressure throughout the session. It closed 187 points, or 1.02 percent, lower at 18,069 and formed a bearish candlestick with long upper shadow on the daily charts, indicating selling pressure at higher levels.
For the week, the index ended just four points higher after May 5 losses erased all the gains but still managed the best closing of the year, so far, forming a Shooting Star pattern on the weekly scale.
A shooting star pattern is formed when the index comes under selling pressure as traders start booking profits at higher levels. The pattern is usually formed in an uptrend and is treated as a reversal pattern but requires confirmation in the following sessions.
The psychologically vital level of 18,000 is expected to be the support on the downside, while 18,200-18,250 is will be the hurdle on the higher side.
"Profit booking around 18,200 led to Friday's fall, which took the Nifty back to the previous week's close. The short-term trend will, however, remain positive as long as the index remains above 18,000," Rupak De, Senior Technical Analyst at LKP Securities said.
A fall below 18,000 can take the Nifty into the 17,500-18,000 consolidation mode.
On the other hand, "a rejection from the 18,000 level may reintroduce a buying spree, which may take the Nifty back to above 18,200 again, and a decisive move above 18,200 may take it towards 18,500–19,000," Rupak said.
On the weekly option front, 18,200, 18,300 and 18,100 strikes have maximum Call open interest, with meaningful Call writing at 18,200 strike followed by 18,100 strike.
On the Put side, the maximum open interest was at 18,200 strike, followed by 18,100 strike, with writing at 17,900 strike, then 18,100 strike.
The data indicates that the Nifty may see a trading range of 17,900-18,300 in the near term.
Banking index
The Bank Nifty opened 600 points lower due to a sharp selloff in some stocks and remained highly volatile.
The fall worsened and the index closed 1,024 points or 2.3 percent lower at 42,661 and formed a bearish candlestick on the daily scale with long upper shadow.
For the week, the index was down 573 points and formed a bearish candle on the weekly scale.
The Bank Nifty has to hold above 42,750 to move towards 43,000 and then 43,333. A hold below the same, can drag the index to 42,400 then 42,250, Chandan Taparia, Senior Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
India VIX, the volatility index, was up 4.79 percent to 12.30.
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