Technical View | Nifty forms large bearish candle on Manic Monday, experts say can slip to December lows

Market Fall

Market Fall

The Nifty50 plunged 3 percent in the biggest single-day fall since April 12, 2021, as bears dominated Dalal Street for the second consecutive session, which saw the index breach the psychological support level of 17,000 on February 14.

Weak global cues amid tensions between Ukraine and Russia and rising oil prices dampened the market sentiment and experts don’t rule out the index falling to 16,410, the swing low touched on December 20, in the coming sessions before resuming the uptrend.

The index formed a large bearish candle on the daily charts as the closing was lower than the opening level.

Also read: Manic Monday for Indian markets, here are 4 factors for the steep decline

The volatility also spiked to 22.98, the highest closing level since May 2021, up 23 percent from 18.68 levels on February 11, which indicates wild swings going ahead.

After opening gap-down at 17,076.15, the Nifty extended losses as the day progressed and hit the day’s low of 16,809.65 before ending the session at 16,842.80, the lowest closing since December 21, 2021, down 532 points.

Also read: Gainers & Losers: 5 stocks that moved the most on February 14

“Nifty50 seems to have resumed its downtrend with a huge gap-down opening, which not only sustained throughout the session but also damaged the index by 3 percent. Moreover, with an intraday low of 16,809 levels, this counter erased all the gains registered between January 25 and February 2, from the lows of 16,836 to 17,794 levels,” said Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia.

It is just a matter of time before the Nifty breached the corrective swing low of the ongoing intermediate downtrend placed at around 16,410, he said.

As the single session selling is overdone, a pullback attempt is likely in the next one or two sessions, which will remain vulnerable to a selloff, especially when bulls make an attempt to enter into the large bearish gap zone of 17,099 and 17,303 registered on February 14, Mohammad said.

For the time, traders should remain neutral on the index for the day.

Also read: Markets in a bear trap, investors lose Rs 10 lakh crore of wealth in 2 days

With the correction, the trading range indicated by the options data shifted lower to 16,500-17,300 for the coming days.

Maximum Call open interest witnessed at 18,000 then 17,500 strikes, while maximum Put open interest was seen at 16,000 then 16,500 strikes. Marginal Call writing was seen at 17,400 then 17,500 strikes, while Put writing was at 16,500 then 16,200 strikes.

The Nifty Midcap 100 and Smallcap 100 indices fell sharply, declining 3.94 percent and 4.44 percent, respectively.

Banking index

The Bank Nifty also opened lower at 37,664 and decisively broke its 50-day exponential moving average (37,671) on the daily frame to hit the day’s low of 36,828.

All banking stocks remained under pressure and closed with 3-7 percent down. The index plunged 1,608.65 points, or 4 percent, to 36,908.60 and formed a bearish candle on the daily scale.

Also read: India VIX jumps 23% amid Ukraine-Russia tensions, experts expect higher volatility to stay

“The index has been making lower high – lower lows from the last two sessions. Now, till it holds below 37,250, weakness could be seen towards 36,500 and 36,250 whereas on the upside, hurdles are visible at 37,500 and 37,800 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

On the stock front, a bullish setup was seen in ONGC and TCS, he said.

Weakness was seen in several stocks, including Metropolis Healthcare, LIC Housing Finance, Strides Pharma, Piramal Enterprises, Indiabulls Housing Finance, Deepak Nitrite, PNB, Federal Bank, DLF, JSW Steel, Shriram Transport Finance, BHEL, Manappuram Finance, HDFC Life, Tata Motors, Godrej Properties, SAIL, HDFC, L&T Finance Holdings, Amara Raja Batteries, Nippon Life, Muthoot Finance, Lupin, Dr Lal PathLabs, ICICI Bank, Jubilant FoodWorks, Exide Industries and RBL Bank, Taparia added.

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