Technical View | Nifty breaks 17,000; 16,750-16,800 to be crucial support


The Nifty broke the psychologically vital 17,000 mark as selling intensified on weak global cues over growing fears of a recession, with every sector closing in the red on October 11.

The index opened flat at 17,256 but started drifting lower to hit the day’s low of 16,950 in late trade. The index closed 257 points, or 1.5 percent, lower at 16,983.

It closed below 50, 100 and 200-day exponential moving averages of 17,261, 17,105 and 17,189, respectively, as well as the 200-day moving average at 16,986. It formed a Bearish Engulfing candlestick pattern on the daily charts.

The index now has to take support at 16,750-16,800, around the low of September 30. If the support gets broken, sharp selling pressure can’t be ruled out in the coming sessions, experts said.

“As we’re not seeing any respite on the global front, any disappointment on earnings or the macroeconomic front may put further pressure. On the index front, we are now eyeing 16,800 in Nifty and its decisive break would reverse the recovery trend,” Ajit Mishra, VP-Research at Religare Broking said.

The broader market also ended lower. The Nifty midcap 100 and smallcap 100 indices were down 1.7 percent each amid disappointing breadth. About four shares declined for every advancing share on the National Stock Exchange.

Also read: Taking Stock | Market sinks deeper into the red; Sensex tanks 843 points, Nifty below 17,000

The volatility index India VIX rose 4.42 percent to 20.49 levels, adding to discomfort for bulls.

On the options front, the maximum Call open interest was seen at 17,200 strike followed by 18,000 strike, with Call writing at 17,200 strike then 17,100 strike.

The maximum Put open interest was seen at 17,000 strike followed by 16,000 strike, with Put writing at 16,600 strike then 16,800 and unwinding at 17000 strike.

The data suggests that the immediate trading range for the Nifty shifted lower to 16,800-17,200 from 17,000-17,500.

Also read: Stay with bottom-up stock-picking strategy to navigate near-term volatility, says this equity research head

Banking index

The Bank Nifty opened negative at 39,059 and moved in a zig-zag manner. It formed a bearish candle but an Inside bar on the daily scale as it closed 380 points lower at 38,712.

“The banking index has to hold above 38,500 to make an up move towards 39,000 and 39,250 levels, whereas supports are seen at 38,250 and 38,000 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

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