The Nifty ended in the red for the second consecutive session on August 22, as the Indian market saw its worst day in two months following across-the-board selling and renewed worries of aggressive rate hikes by the US Federal Reserve.
The index closed 267.80 points, or 1.51 percent, down at 17,490.70 to from yet another bearish candlestick on the daily charts.
The trend indicator Moving Average Convergence and Divergence, popularly known as MACD, also gave a “sell” signal on the daily charts, experts said.
If the index manages to defend 17,300, the next crucial support, in the coming session, there could be some consolidation. A break of the support can drag the index to the 17,000 mark, experts said.
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The Nifty seems to have kicked in some downswing rallies and may remain vulnerable to a selloff. No strength should be expected unless the Nifty closes above the day’s bearish gap zone of 17,690-17,710.
Therefore, for positional shorts, a stop-loss above 17,710 would be an ideal level, Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.
All sectoral indices ended lower. The Nifty midcap 100 and smallcap 100 indices declined 2 percent and 1.6 percent.
India VIX, which measures the expected volatility in the market, was up 4.11 percent to 19.04 levels.
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Volatility has been rising for the last two sessions and should stay below 18 for the market to stabiles, experts said.
On the options front, the maximum Call open interest was seen at 18,000 strike followed by 18,500 strike, while maximum Put open interest was seen at 17,000 strike then 17,500 strike. Call writing was seen at 17,600 strike followed by 17,700 strike while Put writing was seen at 17,400 strike then 17,100 strike.
The data indicates that an immediate trading range of 17,300-17,700 for the Nifty.
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Banking index
The Bank Nifty opened 300 points lower at 38,694 and closed 688 points down at 38,298, forming a bearish candle on the daily scale.
It has to hold above 38,250 to make an up move towards 38,750 and 38,888, while supports are placed at 38,000 and 37,750, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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