Technical View
The Nifty remained under selling pressure on September 16 as well on weak global cues and a surge in the dollar index, falling from around 18,100 to 17,500 in just three days.
A rise in US bond yields amid fear of aggressive policy tightening by the Federal Reserve in the upcoming policy meeting to tame inflation, too, weighed on the sentiment.
The Nifty opened lower at 17,797 and sank to the day’s low of 17,497. It closed 347 points, or 2 percent, lower at 17,531. For the week, it was down 1.7 percent.
The index formed a bearish candle on the daily chart. The pattern has two candlesticks—the first red and the second green. The green body engulfs the body of the first red candlestick.
On the weekly scale, the Nifty formed a Bearish Engulfing pattern.
“On the daily timeframe, the index has fallen below the near-term moving average, 20 days exponential moving average (EMA – 17,681). The momentum oscillator is in bearish crossover and falling. The trend for the near term looks negative,” Rupak De, Senior Technical Analyst at LKP Securities said.
If the index manages to hold 17,500, there is fair chance of it moving upwards. A slip can pull the index down to 17,300. On the higher end, resistance is visible at 17,700, De added.
The broader space, which has been doing better than the benchmark, too, was hammered. The Nifty Midcap 100 index was down 2.8 percent and smallcap 100 fell 2.6 percent.
All sectors closed in the red, with IT and realty taking the hardest hit, falling nearly 4 percent each.
India VIX, which indicates the expected volatility in the index over the next 30 days, was up 7.72 percent to 19.82 levels.
On the options front, the maximum Call open interest was seen at 18,000 strike followed by 18,500 strike, while the maximum Put open interest was seen at 17,500 strike then 17,000 strike.
Call writing was seen at 17,700 strike then 17,800 strike, while Put writing was seen at 17,500 strike then 17,600 strike.
The data suggests a shift in the trading range for the Nifty to 17,300-17,800 for the coming sessions from 17,600-18,100.
Banking index
The Bank Nifty opened more than 230 points lower at 40,977 and moved in line with the broader market. It closed 432 points lower at 40,777.
It formed a small-bodied bearish candle on the daily scale and an Inverted Hammer on the weekly frame.
Till the index stays below 41,000, it can slip to 40,500 and 40,250, whereas resistance is seen at 41,250 and 41,500 levels, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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