The Nifty50 made an attempt to surpass the initial short term hurdle of 17,350 in the morning but failed to hold the same levels. The index wiped out all gains in the afternoon and closed lower despite the positive trend in global peers, as elevated oil prices and inflation worries amid the ongoing Ukraine-Russia war weighed on sentiment.
But the index still decisively holds the 200-day moving average (DMA) placed around the 17,000 mark. Hence the current consolidation, if there is no bad news on the domestic or global front, can help the index march upwards to 17,900-18,000 levels in coming sessions, experts say.
The index has formed a bearish candle on the daily charts as the closing was lower than opening levels.
The volatility has increased a bit further but remained in a particular range, which experts feel cannot weaken the current positive sentiment. India VIX rose by 2.81 percent to 24.75 levels.
The Nifty50 opened higher at 17,405 and moved higher up to 17,442, but lost all gains in the afternoon and corrected up to 17,200 before closing 70 points lower at 17,246.
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“Albeit bulls made an attempt to get past the short term hurdle of 17,350 levels, they failed to hold on to the index above that as selling pressure resumed from the highs of 17,442 levels. Hence, it appears that the Nifty may remain in a consolidation range in the zone of 17,450 to 17,100 levels in the near term,” says Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia.
He feels the strength can resume on a close above 17,450 levels for higher targets present around 17,900, whereas weakness should be expected only on a close below 17,000 levels.
Meanwhile, positional traders with high risk-taking ability could make use of the current weakness to create long positions, but stop-loss would continue to remain below 16,980 levels, Mohammad advised.
As per Options data, the trading range for the Nifty50 remains at 17,000 (which can act as a crucial support) to 17,700 (which can be a critical hurdle) for coming sessions. Maximum Call open interest was seen at 18,000 strike followed by 17,500 strike while maximum Put open interest was seen at 16,500 strike then 16,700 strike. Call writing was seen at 17,500 strike followed by 17,300 strike while Put writing was seen at 16,700 strike then 16,800 strike.
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Chandan Taparia, Vice President, Analyst-Derivatives at Motilal Oswal Financial Services says there was a positive setup in Hindalco Industries, SAIL, Jindal Steel & Power, Indian Energy Exchange, Zee Entertainment Enterprises, Dr Reddy’s Labs, Tata Steel, UPL, and Cummins India while weakness was seen in Chambal Fertilizers, Muthoot Finance, HDFC, Kotak Mahindra Bank, Berger Paints and Bharti Airtel.
Bank Nifty also had a gap-up opening at 36,628 and moved up above 36,800 levels, in line with the broader market. However, it failed to hold at higher zones and remained weak to resilient for the later part of the trading session. The index formed a bearish candle on daily scale and closed with losses of 201 points at 36,147.
“Now the banking index has to hold above 36,000 levels, for an up move towards 36,300 and 36,600 levels, whereas support can be seen at 35,750 and 35,500 levels,” says Taparia.
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