The Nifty ended lower on August 29 as US Federal Reserve chairman Jerome Powell’s hawkish stance on interest rate hikes triggered a global selloff. The index closed 246 points lower from the previous session at 17,313.
The index opened sharply lower and slipped to 17,166 but managed to narrow the losses by the end of the day and formed a bullish candlestick on the daily charts, as the closing was higher than the opening tick.
"The Nifty50 decisively breached its 20-day SMA (simple moving average - 17,549) which offered some support in the recent fall. Hence, unless the Nifty bridges Monday's bearish gap present in the zone of 17,380 and 17,519 levels, the trajectory of the index shall be on the downside," Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.
Meaningful support is present in the 17,018-16,947 zone, which is a bullish gap registered on July 29. The 200-day SMA is also placed (16,975) inside the said zone.
On the upside, 17,500 can be the cap and unless the Nifty closes above 17,550, all pullback attempts will remain vulnerable to a selloff, the market expert said.
All sectors, barring FMCG, traded lower, with IT falling the most, down 3.5 percent. The broader market also saw correction but was better off than the benchmarks.
The Nifty midcap 100 and smallcap 100 indices were down 0.8 percent and 1 percent on negative breadth. About two shares declined for every share rising on the NSE.
Moving average convergence and divergence (MACD oscillator indicated a lower trend on the daily charts, while the relative strength index was below 60 levels, signalling a loss of momentum.
The volatility increased significantly. India VIX, an indicator of volatility over the next 30 days, was up by 8.82 percent to 19.82 levels.
On the Option front, the maximum Call open interest was seen at 18,000 strike followed by 18,500 strike, while maximum Put open interest was seen at 17,000 then 17,500 strike. Call writing was seen at 17,500 strike followed by 17,600 strike, while marginal Put writing was seen at 17,300 then 17,200 strike.
The Options data indicates that in an immediate term, the Nifty can trade in the 17,000-17,700 range due to higher volatility.
The Bank Nifty opened gap down at 38,112 and moved in a rangebound manner.
The index formed a bullish candle on the daily scale but closed with losses of 710 points at 38,277. If it remains below 38,500, weakness can be seen towards 37,950 and 37,750, whereas resistances are placed at 38,500 and 38,888, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.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.