Technical View | Nifty forms bearish candle, sharp weakness possible below 200 DMA


The Nifty50 remained under selling pressure throughout the session on October 13 and fell more than 100 points, but defended not only recent low of 16,950 but also 200 days moving average (DMA – 16,987), tracking weak Asian cues. If these levels get broken then sharp selling pressure can’t be ruled out in coming sessions, till then consolidation and volatility is expected to continue, experts said.

The index has formed bearish candlestick pattern on the daily charts as the closing was lower than opening levels. Banking & financial services, select IT and FMCG stocks weighed down the market.

The broader markets also traded in line with benchmarks as the Nifty Midcap 100 index was down 0.7 percent and Smallcap 100 index fell 0.4 percent on weak breadth. About two shares declined for every share rising on the NSE.

The Nifty50 opened lower at 17,087 and hit a day’s low of 16,957 amid volatile and rangebound session. The index settled at 17,014, down 109 points.

“The Nifty is consistently taking support near the 200 days SMA (simple moving average) or 16,950 while facing strong resistance at 17,150,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

Also read – Rupee depreciation against USD can continue till US Fed keeps tightening liquidity: Nishit Master of Axis Securities PMS

A sharp correction wave is possible if the index trades below 16,950 and on further decline, it could slip till 16,800-16,700, the market expert added.

The volatility index India VIX rose by 0.57 percent to 20.29 levels, making the bulls uncomfortable at Dalal Street. Unless and until the volatility falls below 18 levels, the stability is unlikely in the market, experts said.

On the Option front, maximum Call open interest at 18,000 strike was seen, followed by 17,000 & 17,100 strikes, with Call writing at 17,000 strike then 18,000 strike. The maximum Put open interest was seen at 17,000 strike followed by 16,000 & 16,500 strikes, with Put writing at 17,000 strike then 16,900 strike.

The above Option data indicated that the Nifty may trade in the range of 16,500-17,500 levels in coming sessions.

Bank Nifty also caught in bear trap, opening lower at 38,958 and hitting an intraday low of 38,438. The banking index fell nearly 500 points to close at 38,624 and formed bearish candle on the daily charts with taking support at 38,500 levels.

Also read – Infosys Q2 result: Net profit rises 11% YoY to Rs 6,021 crore

“The Bank Nifty index witnessed some selling pressure on the higher end and faces stiff resistance around the 39,500-40,000 level where aggressive Call writing has been seen. The index remains in a downtrend with lower high and lower low formations intact,” Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said.

The index if breaches below 38,400 on a closing basis will lead to further sell-off towards 38,000-37,500 levels. The immediate upside resistance is placed at 39,000 and if breached will see some short covering moves, the expert added.

Disclaimer: The views and investment tips expressed by investment experts on are their own and not those of the website or its management. advises users to check with certified experts before taking any investment decisions.