The Nifty ended deep in the red on September 23 as well, tracking weakness in global peers amid mounting recession fears following aggressive policy tightening by the US Federal Reserve and other central banks.
The index closed 302 points, or 1.7 percent, lower at 17,327. For the week, it was down 1.16 percent and formed a bearish candle on the daily charts.
With a fall of more than 300 points in a day, the index saw a breakdown of crucial support levels of 17,400-17,500.
The index formed a big bearish candlestick on the daily charts, closing below not only 50-day simple moving average (17,340) and 50-day exponential moving average (17,358), but also slipping below the gap area (17,380-17,401) of August 30.
The August low of around 17,150 will be crucial support for the Nifty and if it is broken, the index can slip below 17,000, experts said.
“Technically, the Nifty witnessed closing below 50-DMA with a breakdown of a bearish head and shoulder formation that may lead to further weakness. On the downside, 17,150 is an immediate support level, while 200-DMA of 17,000 is a sacrosanct support level,” Santosh Meena, Head of Research at Swastika Investmart said.
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On the upside, 20-DMA of 17,700 is a critical hurdle. “We are heading into expiry weak on a weaker note as the Nifty slipped below the Put base of 17,500 where 17,000 is the next base,” the expert said.
All the sectors closed in red, with banking and financials correcting the most. The broader market mirrored the benchmark. The Nifty Midcap 100 and smallcap 100 indices declined more than 2 percent each.
The volatility also spiked. India VIX, which indicates the expected volatility over the next 30 days, jumped 9.44 percent to 20.59 levels. A level below 20 is important for the market to stabilise.
On the Options front, maximum Call open interest was seen at 18,000 strike followed by 17,600 strike, while maximum Put open interest was seen at 17,000 strike then 16,800 strike.
We saw Call writing at 17,500 strike then 17,600 strike, while Put writing was seen at 17,300 strike followed by 17,000 strike.
This data indicates that the immediate trading range for the Nifty shifted lower to 17,000-17,600 from 17,300-17,800 earlier.
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The Bank Nifty opened negative at 40,429 and plunged to 39,400. The index closed 1,084 points, or 2.7 percent, lower at 39,546.
The index formed a bearish candle on the daily scale and made lower highs–lower lows for the third session. It also formed a bearish candle on the weekly frame and negated its higher highs of the last three weeks.
Till it remains below 40,000, weakness can be expected towards 39,250 and 38,888, whiles hurdles are placed at 40,000 and 40,250, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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