The Nifty ended lower on December 7 after the Reserve Bank of India (RBI) raised the key policy rate and sounded hawkish in its fight against inflation.
At its bi-monthly monetary policy review, the RBI raised the repo rate by 35 basis points to 6.25 percent and lowered the FY23 GDP growth forecast to 6.8 percent from 7 percent. It retained inflation estimates at 6.7 percent for FY23 and its policy stance unchanged at withdrawal of accommodation.
After opening flat at 18,639, the index moved higher to hit an intraday high of 18,668 but surrendered all gains after the RBI’s rate announcement to drop to 18,528. It recovered some of the losses in the final minutes to end 82 points down at 18,560.
The Nifty formed a bearish candle on the daily charts. As long as the index holds crucial 18,500 mark, the consolidation is expected to continue and hopes remain for index inching back towards 18,700 mark in coming sessions, experts said.
“A sign of timidness is evident as there is no cue of follow-up buying in the index to levitate the sentiments. The recent developments construe a motion of tentativeness among the market participants as the Nifty plunged to test the critical support zone,” Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One said.
As long as the index holds 18,500, the view of buy on dips and sell on rise remains unscathed, he said.
The lack of firm buying is the only worrisome, signifying the indecisiveness among the bulls.
On the higher end, “a decisive closure above 18,700 could only bring some cheer back into the market, and then we may expect the northward journey to continue,” the market expert said.
On the options front, the maximum Call open interest was at 19,000 strike followed by 20,000 strike, while the maximum Put open interest was seen at 18,000 strike then 18,500 strike.
We have seen Call writing at 18,600 strike followed by 18,700 strike, while minor Put writing was seen at 18,500 then 18,600 strike.
As per the data, the Nifty may trade in a range of 18,400-18,800, which shifted lower from 18,500-19,000, in the immediate term.
The volatility index India VIX was up by 0.24 percent from 14.04 to 14.08 levels but still remains at lower levels, offering comfort to the bulls.
Banking index
The Bank Nifty opened flat at 43,157 and moved in a range of 380 points. It closed 40 points lower at 43,099.
The index formed a small bodied bearish candle on the daily charts, with longer shadows indicating swings on either side. It has to hold above 43,000 to make an up move towards 43,250 and 43,500, with supports at 42,750 and 42,500, Shivangi Sarda, Senior Executive | Analyst at Motilal Oswal Financial Services said.
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