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Technical View | Nifty sees lowest closing of 2022, experts warn of more pain

Some pullback can be expected but that, too, will remain vulnerable to a selloff, say experts, adding a breach of 15,671 can drag the index to 15,300

June 13, 2022 / 05:28 PM IST

The Nifty closed at its lowest in the year 2022 on June 13 as a global selloff singed the Indian market over growing concerns that the Federal Reserve may go for a bigger than 50 bps rate hike with US inflation soaring to a 40-year high.

After opening below the psychologically important 16,000-mark at 15,877.55, the index hit the day’s low of 15,684 in the afternoon, almost near the March low of 15,671. It closed at 15,774.40, down 427.40 points or 2.64 percent.

The index formed a bearish candlestick on the daily charts as the closing was below the opening level.

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"The Nifty50 almost tested the March 8 low of 15,671 levels before bouncing back from the intraday low of 15,684 levels. Moreover, the current leg of fall from the recent high of 16,793 took only six sessions against the recent pullback rally from the lows of 15,735 to a high of 16,793 which lasted for 14 sessions," Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

Close

This faster retracement on the downside may be hinting at a fresh leg of the downswing in progress. A breach of 15,671 can drag the index to 15,300, where some support is available, the market expert said.

Some pullback can be expected in the next session but that, too, will remain vulnerable to a selloff, he said.

Also read: At $17 Billion Loss, LIC IPO Among Top Asia Wealth Losers

Flashing red

All sectors ended in the red, with Nifty bank, IT, financial services, metal and realty indices falling 3-4 percent.

The broader markets were hit harder than the benchmarks. The Nifty midcap 100 and smallcap 100 indices fell 2.9 percent and 3.9 percent respectively. Nearly 10 shares declined for every rising share on the NSE.

India VIX, the fear index, was up by 14.25 percent at 22.37 levels.

After the heavy selloff, the broader trading range for the Nifty50, indicated by option data, has shifted significantly lower to 15,400-16,300 levels, from 15,800-16,700 levels earlier.

On the options front, maximum Call open interest was seen at 17,500 strike followed by 17,000 strike, while maximum Put open interest was seen at 16,000 then 15,500 strike.

Call writing was witnessed at 16,000 strike followed by 16,200 strike, while minor Put unwinding was seen at all the immediate strikes.

Also read: Market crash erodes nearly Rs 7 lakh crore of investor wealth today

Banking index

The Bank Nifty opened more than 750 points lower at 33,729 and slipped to 33,200. It closed the day 1,078 points lower at 33,406.

The banking index formed a bearish candle on the daily scale and formed lower lows from the ninth consecutive session.

As long as the index remains below 33,750, more weakness can be seen towards 33,000 and 32,500, whereas hurdles are placed at 34,000 and 34,250, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.

On the stock front, positive setup was seen in Marico, Pidilite Industries, Bajaj Auto, Siemens and Hero MotoCorp.

However, weakness was seen in RBL Bank, Bajaj Finserv, M&M Financial, L&T Finance Holdings, Gujarat Gas, L&T Technology Services, Mindtree, Cholamandalam Investment, L&T Infotech, Mphasis, Bajaj Finance, NALCO, Granules, Canara Bank, Apollo Tyres, IndusInd Bank, Tata Power, Coforge, ICICI Bank, Tata Motors, Hindalco, Piramal Enterprises, BHEL and DLF, 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.
Sunil Shankar Matkar
first published: Jun 13, 2022 05:28 pm
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