Technical View | Nifty forms bearish candle on daily scale, volatility at two-month high


Indian shares continued to be hammered for a fifth straight session on January 24, with the Nifty even plunging below 17,000 intraday amid an intense across-the-board selling.

The Nifty started the day on a negative note and extended the fall on weak global cues, continues FII selling and worries about interest rate hike ahead of the two-day Federal Reserve meeting that begins January 25.  It closed 468.10 points, or 2.66 percent, down at 17,149.10.

“The Nifty50 registered a long black day kind of formation as selling pressure accentuated in the fifth session in a row with a cut of almost 3 percent. In a way, today’s steep fall can be acting as a confirmation of resuming downtrend from recent high of 18,350 levels,” said Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.

“The logical targets for this downward leg can be below 16,410 levels, which was registered on 20th of last December. In between, some support can be expected around 16,600 levels where 200-day exponential moving average is placed.”

Due to the sharp correction of last five sessions, a bounce, too, can’t be ruled out, said. In that scenario, the ideal trading range for Nifty would be between 17,600 and 17,000 levels.

For now, it would be prudent to avoid trading bets, Mazhar added.

On the Option front, in the monthly series Maximum Call OI (open interest) is at 18,000 then 17,500 strike, while Maximum Put OI is at 17,000 followed by 16,500 strike.

Meaningful Call writing is seen at 17,500 and 17,400 strike, while Put unwinding is seen at 17,300 and 17,500 strike. Option data suggests a wider trading range between 16,700 and 17,700 zones, while the immediate trading range is between 16,800 to 17,350 zones.

India VIX, a measure of expected volatility, shot up 20.84 percent from 18.88 to 22.82 levels to a two-month high, signalling wild swings with strong bear grip in the market.

Bank Nifty

The Bank Nifty opened flat and mirrored the broader market to touch 36,375. Towards the end of the day, it saw recovery but still closed 620 points lower.

It formed a bearish candle on the daily scale with a long lower shadow and formed lower lows for fifth session in a row.

“Now till Bank Nifty holds below 37,250 zones, weakness can be seen towards 36,500 and 36,350 levels, while resistance can be seen at 37,500 and 37,750 levels, Chandan Taparia of Motilal Oswal said.

On the stock front, a bullish setup was seen in Bandhan Bank, Cipla, Lupin and ONGC. Weakness was seen in Astral, Godrej Properties, ZEEL, Jindal Steel, Coforge, Dixon, Nam India, IGL, JSW Steel, L&T Infotech, RBL Bank, Aurobindo Pharma, STAR, PEL, IRCTC, Bajaj Finance, Tata Steel, Naukri, DLF, SAIL, Indiabulls Housing, India Mart, L&T Technology Services, Tech Mahindra, Havells, Mindtree, Wipro, Hindalco, Bata India and Tata Motors, Taparia said.

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