Nagaraj Shetti of HDFC Securities said technically, Bearish Belt Hold pattern signals a sharp negative reversal in the market.
The market saw its biggest one-day fall in 2019 on June 6 as bears smashed the bulls right from the onset as the RBI did not make any announcement to tackle liquidity stress facing by NBFCs.
The market was also worried about banks' loan exposure to DHFL which defaulted on debt repayment on June 4.
After a 25 bps rate cut by the central bank and change in policy stance to accommodative from neutral, traders might have chosen to book profits as the market had seen a one-way rally after election results, experts said, adding 11,600 would be crucial level to watch out for in coming days.
"The fall can be contributed by that local market participant who was expecting 35bps cut and some aggressive measure of liquidity push which did not materialise," Sameer Kalra, Founder & President of Target Investing told Moneycontrol.
The BSE Sensex plummeted 553.82 points to close at 39,529.72 while the Nifty50 fell 177.90 points to 11,843.80 and formed 'Bearish Belt Hold' pattern on daily charts.
"Thus the battle is likely to get tougher going ahead. The bulls need to put in extra efforts to defend the support zone of 11,830-11,800, which holds the key for a further extension on the upside," Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas told Moneycontrol.
Nagaraj Shetti - Technical Research Analyst at HDFC Securities also said technically, this pattern signals a sharp negative reversal in the market. "The recent all-time high of 12,103 levels could now be considered as a near term top reversal pattern in the Nifty."
The short term trend of Nifty is down, one may expect further weakness in the next session, he said, adding next lower levels to be watched at 11,600 (upper area of previous opening upside gap of 20th May) in the next few sessions.
The weakness was seen in the broader market indices too as the Nifty Midcap index lost 1.65 percent and Smallcap index shed 1.86 percent. The fall was led primarily by the banking stocks especially the PSU banks. Nifty PSU Bank index plunged 5 percent.
We have collated 15 data points to help you spot profitable trades:
Key support and resistance level for Nifty
Nifty closed at 11,843.75 on June 6. According to the Pivot charts, the key support level is placed at 11,769.4, followed by 11,695. If the index starts moving upward, key resistance levels to watch out are 11,979 and 12,114.2.
The Nifty Bank index closed at 30,857.40, down 731.65 points on June 6. The important Pivot level, which will act as crucial support for the index, is placed at 30,591.64, followed by 30,325.87. On the upside, key resistance levels are placed at 31,332.34, followed by 31,807.27.
Call options data
Maximum Call open interest (OI) of 26.10 lakh contracts was seen at the 12,500 strike price. This will act as a crucial resistance level for the June series.
This is followed by 12,000 strike price, which now holds 18.98 lakh contracts in open interest, and 12,200, which has accumulated 13.09 lakh contracts in open interest.
Significant Call writing was seen at 12,500 strike which added 6.6 lakh contracts, followed by 12,000 strike that added 5 lakh contracts and 11,900 strike which added 2.66 lakh contracts.
Call unwinding was seen at the strike price of 12,400, which shed 1.4 lakh contracts, followed by 11,500 strike which shed 0.27 lakh contracts.
Put options data
Maximum Put open interest of 27.16 lakh contracts was seen at 11,500 strike price. This will act as a crucial support level for the June series.
This was followed by 11,800 strike price, which now holds 18.27 lakh contracts in open interest and 11,700 strike price, which has now accumulated 14.88 lakh contracts in open interest.
Put writing was seen at the 11,800 strike price, which added 1.69 lakh contracts, followed by 11,500 strike which added 0.97 lakh contracts.
Put unwinding was seen at the strike price of 12,000, which shed 2.52 lakh contracts, followed by 12,100 strike which shed 1.42 lakh contracts.
Stocks with a high delivery percentage
High delivery percentage suggests investors are accepting the delivery of the stock, which means that investors are bullish on it.
40 stocks saw a long buildup
16 stocks that saw short covering
A decrease in open interest, along with an increase in price, mostly indicates short covering.
80 stocks saw a short build-up
An increase in open interest along with a decrease in price mostly indicates a build-up of short positions.
92 stocks saw long unwinding
FII & DII data
Foreign Institutional Investors (FIIs) sold shares worth net Rs 1,448.99 crore and Domestic Institutional Investors (DIIs) sold Rs 650.84 crore worth of shares in the Indian equity market on June 6, as per provisional data available on the NSE.
Fund Flow Picture
Stocks in news
Wipro: Company appointed Azim Premji as Non-Executive Director for 5 years and re-appointed Rishad Premji as Whole-Time Director. Azim Premji to retire from his current position as Executive Chairman & MD.
Bharti Airtel: Oyo Hotels & Homes and Airtel partner to launch Oyo Store on Airtel Thanks App.
Hindustan Petroleum Corporation: Board appointed Shri Sunil Kumar as government nominee director on the board of HPCL.
PAE: Pritam A Doshi resigned as Chief Financial Officer (CFO) of the company.
JSW Steel: Company has agreed to acquire the entire issued and paid-up share capital of Piombino Steel Limited.
Jai Corp: Board appointed Priyanka S Fadia and Kaushik Deva as additional directors of the company.
Ruchira Papers: CRISIL has assigned credit rating of BBB+/Stable to long term facilities and A2 to short term facilities of the company.
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Analyst or Board Meet/Briefings
PSP Projects: Company's officials will meet Laburnum Capital Advisors Private Ltd on June 7.
Sandhar Technologies: Company's officials will have a conference call with Mahesh Keshavrav Bendre of Karvy on June 7.
Ircon International: Investors Conference call is scheduled to be held on June 7 to discuss audited financial results.
Pidilite Industries: Company's officials will meet Matthews Asia Fund on June 12.
Symphony: Company's officials will have a conference call with Helios Capital Management (India) LLP on June 13.
Avenue Supermarts: Analyst/ investor meeting for the year 2019 has been scheduled on June 12.
Alembic Pharmaceuticals: Board meeting is scheduled on June 12 to consider the proposal for issue of non-convertible debentures on private placement basis.
Allcargo Logistics: Company's officials will meet Sundaram Mutual Fund on June 7.
Three stocks under F&O ban period on NSE
For June 7, DHFL, IDBI Bank and PC Jeweller are under the F&O ban period.Securities in ban period under the F&O segment include companies in which the security has crossed 95 percent of the market-wide position limit.The Great Diwali Discount!
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