The Nifty retreated on October 3 after a sharp rebound in the previous session to close 207 points, or 1.2 percent, lower at 16,887.
Weakness in global markets amid fears of slowing growth and a fall in manufacturing PMI at home in September triggered selling pressure. All sectors, barring pharma, ended in the red, with auto, FMCG, and metal suffering the biggest losses.
The index formed a bearish candlestick on the daily charts, indicating a lack of strength. The index though managed to defend crucial support of 16,750-16,800.
If it fails to hold the support, then the index can slide to 16,600-16,300 in the coming sessions, experts said.
“The index has fallen below the 200-day moving average (DMA), which is again a bearish setup. The relative strength index (RSI) is in bearish crossover and falling towards the oversold zone,” Rupak De, Senior Technical Analyst at LKP Securities said.
On the lower end, the index has support at 16,800. A decisive fall below 16,800 can take the Nifty towards 16,600-16,300. On the higher end, resistance is visible at 17,000-17,200, the market expert said.
The broader market mirrored the benchmark, with the Nifty midcap 100 and smallcap 100 indices declining 1.25 percent and 0.66 percent. About two shares declined for every share that gained on the NSE.
India VIX, which indicates the expected volatility in the market over the next 30 days, moved up after declining in a previous couple of sessions. It rose 6.99 percent to 21.37.
Also read: Taking Stock | Sensex tanks 638 pts, Nifty ends below 16,900 amid across-the-board selling
On the Options front, the maximum Call open interest was seen at 17,000 strike followed by 17,500 strike, while the maximum Put open interest was at 16,000 strike then 17,600 strike.
The marginal Call writing was seen at 17,000 strike followed by 17,100 strike, while marginal Put writing was seen at 17,000 strike then 16,900 strike.
The options data suggests that the Nifty50 may trade in 16,700-17,300 range in the immediate term.
Banking index
The Bank Nifty opened negative at 38,445 and the weakness continued throughout the session. It formed a Bearish Harami candle or an Inside Bar on the daily scale and closed 602 points lower at 38,030.
“Now till it holds below 38,000 levels, weakness could be seen towards 37,750 and 37,500 levels, whereas hurdles can be seen at 38,250 and 38,500,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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