The Nifty50 lost momentum after the initial hour of the rally and remained under pressure throughout the session, forming a bearish candle which resembles a Bearish Belt Hold kind of pattern on the daily charts on October 25. This pattern is generally getting formed in an upward trend.
The index erased half of its Muhurat trading gains. This could just be a profit-taking after the recent rally and hence, as long as the index trades above its previous consolidation zone of 17,400-17,650, the trend is expected to be positive with resistance in the range of 17,900-18,000 levels, and support at 17,500-17,400 zone, experts said.
A ‘Bearish Belt Hold’ pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the day making up the large body. The candle will either have a small or no upper shadow and a small lower shadow.
The broader markets had a mixed trend amid weak breadth. The Nifty Midcap 100 index was up half a percent and Smallcap 100 index declined 0.1 percent. About five shares declined for every three rising shares on the NSE.
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The Nifty50 opened strong at 17,808 and hit a high of 17,811, but after an initial hour of the rally, erased all those gains and corrected up to 17,637, an intraday low. The 50-share NSE benchmark closed with 75 points loss at 17,656.
“During the day, the Nifty remained above the previous consolidation high, suggesting a rise in optimism. Over the short term, the trend is expected to remain strong,” Rupak De, Senior Technical Analyst at LKP Securities said.
On the higher end, resistance is visible at 17,950. On the lower end, support is placed at 17,550-17,400, De added.
The market will remain shut on October 26 for Diwali Balipratipada.
India VIX, which measures the expected volatility in the market, was down by 3.11 percent from 17.42 to 16.88 levels. Volatility cooled off from its highs but it needs to now further come down to 15-16 levels for market stability and a smoother ride, experts said.
On the Option front, we have seen maximum Call open interest at 18,000 strike followed by 17,800 strike while maximum Put open interest was seen at 17,500 strike then 17,000 strike.
Also read – Taking Stock | Diwali cheer fails to light up market, Sensex down 288 points, Nifty below 17,700
We have seen Call writing at 17,800 strike followed by 17,900 strike while minor Put unwinding was seen at 17,700 strike then 17,600 strike. This Option data indicated that the Nifty50 may trade in the range of 17,450 to 17,800 levels in coming sessions.
Bank Nifty witnessed a gap-up opening by around 200 points at 41,514 but failed to hold above 41,500 and remained dull with a slight negative bias. It broke its previous day’s low and formed a bearish candle on a daily scale with a profit booking decline from 41,530 to 41,021 levels.
The banking index closed at 41,123, down 182 points. “It has to hold above the 41,000 mark to make an up move towards 41,250 and 41,500 levels, whereas supports can be taken at 41,000 and 40,750 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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