The Nifty 50 nosedived sharply and wiped out all its Friday’s gains in the following two sessions, closing more than 300 points lower on December 17. Market participants may be adopting a cautious stance ahead of the FOMC meeting scheduled for December 17-18. The index dropped below all short- and medium-term moving averages in a single session. Now, the levels of 24,200 (the low of last Friday) and 24,000 (the low of December) are expected to act as support zones. According to experts, the crucial hurdle on the higher side remains the 24,700-24,800 range.
The Nifty 50 opened below 24,600 and remained under pressure throughout the session, closing 332 points (1.35 percent) lower at 24,336. The index formed a long bearish candlestick pattern on the daily charts, indicating a lack of strength to sustain the upside bounce.
According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the positive chart pattern, such as higher tops and bottoms, is still intact on the daily chart. The lower support levels of 24,200-24,000 are expected to be crucial.
If the Nifty manages to hold above the 24,200-24,000 levels in the next few sessions, there is a possibility of a sizable upside bounce in the market. Any failure to hold at these support levels could trigger intense selling pressure. The immediate resistance is at the 24,500 level, he added.
According to the derivative data, the 25,000 strike holds the maximum Call open interest, followed by the 25,500 and 24,700 strikes, with maximum Call writing at the 24,500 strike, followed by the 24,400 and 24,600 strikes. On the Put side, the maximum open interest was seen at the 23,900 strike, followed by the 24,000 and 23,500 strikes, with maximum writing at the 23,900 strike, followed by the 24,350 and 23,700 strikes.
The weekly options data suggests that the 24,000 level is expected to act as support for the Nifty 50, while the resistance is placed at the 24,700 level.
Bank Nifty
The Bank Nifty was also under pressure, falling 747 points (1.39 percent) to close at 52,835, forming a long red candle on the daily charts with selling across banking heavyweights. The index fell below the 10-day EMA (53,149) but defended the 20-day EMA (52,757) on a closing basis, which is a positive sign.
The index has again become stuck in a wider range of 52,500 to 53,750, with volatile swings within this range. Now, as long as it holds below the 53,000 zone, some weakness could be seen towards 52,500, followed by the 52,250 levels. On the upside, the hurdle is seen at 53,000, followed by the 53,250 zones, said Chandan Taparia, Senior Vice President | Head of Technical Research and Derivatives at Motilal Oswal Financial Services.
Volatility spiked further as the market approached the Federal Reserve's meeting (the last event of the year), adding discomfort for the bulls. The India VIX rose by 3.32 percent to 14.49, following a 7.41 percent uptrend seen in the previous session.
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