The Nifty wiped out all the gains of the previous two sessions to close below the psychologically important 17,000-mark on April 25 in a bad start to the expiry week.
The index opened gap down at 17,009 and drifted lower amid volatility to hit the day’s low of 16,889. The index closed at 16,954, down 218 points, or 1.27 percent.
“Weak global cues accompanied by resurfacing Covid worries seem to have spooked the Indian equities as the Nifty settled below the psychological support of 17,000 levels,” Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.
As the index closed below its opening levels, it formed a bearish candle on the daily chart. It is around 100 points away from its 200-day exponential moving average (EMA), which experts said could be a crucial support and if it breaks in the coming sessions, the fall would be sharper.
The volatility also spiked and was above 21 again, as concerns mounted over China’s COVID situation raising growth concerns, which is discomforting bulls. Consistent hawkish commentary from the Fed officials in the US about faster policy tightening also worried the Street.
India VIX jumped 15.82 percent to close at 21.26 levels, the highest closing since March 29 this year.
Also read: Nifty, Sensex slump for second session, 6 factors driving the sell-off
As the index closed in on the 200-day EMA (16,853), apart from the recent corrective swing low of 16,824 levels, some support cannot be ruled out in the zone of 16,850–16,824, Mohammad said.
“If it fails to sustain above the said support zone then the slide may eventually continue towards 16,450–16,400 levels,” he said.
On the upside, strength should not be expected unless the Nifty closes above 17,150 by bridging the day’s bearish gap in the 17,054 and 17,149 zone.
For the time, it would be prudent to remain neutral on the index, Mohammad said.
Options data suggested that the Nifty50, in the expiry week, could see a wider trading range of 16,700 to 17,300 levels.
Also read: Market cracks for second straight session but these 46 stocks scale record highs
On the options front, maximum Call open interest was seen at 17,800 strike followed by 17,500 strike, while maximum Put open interest witnessed at 17,000 strike. Significant Call writing was seen at 17,000 strike then 17,200 strike, while Put writing witnessed at 16,900 strike then 16,800 strike.
The selling pressure in broader markets was much higher than benchmarks. The Nifty midcap 100 index fell 1.92 percent and the smallcap 100 index declined 2.4 percent.
The Bank Nifty opened negative but outperformed the Nifty. Select heavyweights supported the index despite weakness in the broader market. The Bank Nifty closed 38 points up at 36,082 and formed a small-bodied bullish candle on the daily scale.
“The Bank Nifty has to hold above 36,000 to march towards 36,500 and 36,750 levels, whereas supports are placed at 35,750 and 35,500 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
On the stock front, a positive setup was seen in Biocon, TVS Motor Company, Bandhan Bank, Ambuja Cements, ICICI Bank, Colgate Palmolive, Bharti Airtel, Kotak Mahindra Bank, Axis Bank and ACC.
However, Coal India, Cummins India, Indian Energy Exchange, NMDC, NALCO, SAIL, Tata Steel, L&T Infotech, Balkrishna Industries, Aurobindo Pharma, DLF, Zee Entertainment Enterprises, Motherson Sumi, Lupin, Hindalco, Mphasis, Exide Industries, Glenmark Pharma, Siemens, United Spirits, RBL Bank and Piramal Enterprises saw weakness, he added.
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