Bank Nifty surrendered most of its trading gains of the last session and closed lower by 1.13 percent or 410 points at 36,018, forming a bearish candle on daily scale.
The Nifty50 snapped a two-day rally and lost one percent on March 21, thereby forming a bearish engulfing candle on the daily charts. No sign of resolution in peace talks between Ukraine and Russia, and rising oil prices dented investor sentiment.
A bearish engulfing pattern consists of two candles. One candle is usually small which is followed by a large black or red candlestick pattern that engulfs the short one or the previous candle.
Banking & financials, FMCG, Auto, and IT stocks pulled the market down on Monday.
Experts expect the downside to be limited for the time being given the Nifty50 held on to crucial 17,000-mark, which is also the 200-day simple moving average.
The volatility remained elevated due to geopolitical tensions. Unless and until it falls below 20-mark and stays there for few sessions, the market stability is unlikely, say experts. India VIX jumped nearly 9 percent to close at 24.6 levels.
Also read – Gainers & Losers: Five stocks that moved the most on March 21
The Nifty50 opened higher at 17,330 and climbed up to 17,353 levels but failed to hold onto that initial uptick. The index corrected sharply amid volatility and hit a day’s low of 17,096, and finally settled at 17,118, down 169 points or 0.98 percent.
“Nifty50 appears to have come under profit booking after a sharp rally of 8 trading sessions from the lows of 15,671 levels as it registered a Bearish Engulfing kind of formation. However, downsides seem to be limited at this point in time as strong support is placed around 17,000 levels in the form of 200-day simple moving average,” says Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia.
He further says a large bullish gap zone is present between 17,175 and 16,987 levels registered on March 17. Hence, “unless Nifty closes below 16,987 levels, bears will not gain upper hand. In between Nifty may consolidate in a range of 17,350 – 17,000 levels.”
“Upside strength shall not resume unless Nifty closes above 17,350 levels and on such a close it can head towards the 17,800 – 17,900 zone,” says Mazhar Mohammad who advised positional traders with high risk-taking ability to buy the dip with a stop-loss below 16,890 levels as the near term momentum is favouring bulls.
Also read – Market starts the week in red, here are the 4 factors roiling sentiment
On option front, there was maximum Call open interest at 18,000 strike followed by 17,500 strike while maximum Put open interest was seen at 16,000 strike followed by 16,500 strike.
Call writing was seen at 17,200 strike then 17,500 strike while marginal Put writing was witnessed at 17,200 strike then 17,000 strike. Option data indicated the Nifty50 could see an immediate trading range of 16,800 to 17,500 levels.
Bank Nifty surrendered most of its trading gains of the last session and closed lower by 1.13 percent or 410 points at 36,018, forming a bearish candle on daily scale.
“The index negated its higher highs – higher lows of the last four sessions. Now it has to hold above 36,000 levels to show an up move towards 36,250 and 36,500 levels whereas support can be seen at 35,750 and 35,500 levels,” says Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
Positive setup was seen in Vedanta, Aurobindo Pharma, Coal India, Cummins India, PVR, Hindalco, Deepak Nitrite, UPL, L&T Finance Holdings, Alkem Laboratories, Trent and SRF while weakness was seen in Petronet LNG, Indraprastha Gas, InterGlobe Aviation, Max Financial Services, Shriram Transport Finance, MRF, Britannia Industries, ACC, HDFC AMC, Motherson Sumi, HUL, BHEL and TCS, Taparia adds.
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