The Nifty traded lower for most of the day and closed well below 15,800 on June 29, pulled down by metals, auto and banking & financials stocks.
The index formed a bearish candle that resembled a spinning top pattern on the daily charts. The index can fall up to 15,500 if it breaks 15,700 incoming sessions, experts said.
Considering the sideways and directionless phase of the market, traders should wait for a breakout in either of the directions before initiating an index trade, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in said.
A spinning top is often regarded as a neutral pattern that suggests indecisiveness in the market. It can be formed in an uptrend as well as in a downtrend.
After opening flat at 15,807.50, the Nifty extended losses to hit the day's low of 15,724.05 in the last hour of the trade. It fell 66.20 points to close at 15,748.50.
"While the broader trading range of the market looks to be in the zone of 15,900 to 15,500 levels, the near term trend as hinted by the last six sessions of trading behaviour seems to be in the zone of 15,900–15,700 levels," Mohammad said.
A close below 15,700 can be considered an initial sign of weakness, which can drag the index to 15,500, he said.
If the bulls manage to defend 15,700 on a closing basis in the next session, then chances of breaking out above 15,900 remain higher, Mohammad said.
In that scenario a higher target present in the 16,100- 16,300 zone can be expected, he said.
India VIX fell by 2.97 percent from 13.40 to 13 levels. "Lower volatility indicates an overall bullish market bias but small bounce in VIX could give some volatile cues to the market," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On option front, maximum Put open interest was seen at 15,500 followed by 15,000 strike, while maximum Call open interest was seen at 16,000, followed by 16,500 strike. Call writing was seen at 15,800 and 16,000 strike, while Put writing was seen at 15,500 then 15,000 strike.
Options data indicates the Nifty could see a wider trading range of 15,500-16,200 in coming sessions.
The Bank Nifty opened negative at 35,320.45 and drifted lower to hit an intraday low of 34,913.70. It witnessed weakness and profit booking to close 349.10 points lower at 35,010.30.
The index formed a bearish candle on the daily scale and negated its higher low formation of the last three sessions.
"Now it has to hold above 35,000 levels to move up towards 35,250 and 35,500 while on the downside support is seen at 34,750 and 34,500 levels," said Taparia.
On the stock front, a bullish setup was seen in Marico, Apollo Hospital, Indraprastha Gas, Cipla, United Breweries, HUL, Divis Labs, Power Grid and Dr Reddy's Labs. Weakness was seen in Cummins India, Canara Bank, DLF, ONGC, IOC, IDFC First Bank, PVR, Bata India, Kotak Mahindra Bank, M&M, Bajaj Auto, Havells, HPCL and Cholamandalam Investment, he added.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.