The Nifty50 remained under pressure through the day and closed 0.79 percent lower at 18,269 on December 16, tracking nervousness in global markets amid growing fears of a recession.
The index opened lower at 18,319 but rebounded to hit the day’s high of 18,441 only to slip. It sank to the day’s low of 18,255 and closed 146 points down at 18,269. For the week, the Nifty shed 228 points.
The index formed a bearish candle with a long upper shadow, which resembled the Inverted Hammer pattern on the daily as well as weekly charts.
“Lower top formation on daily charts and double top reversal formation on intraday charts are indicating further downside from the current levels,” Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities, said.
The Nifty not only broke the important support of 18,400 but closed below it. The next support would be the 50-day SMA (simple moving average) or 18,100-18,000 levels, he said.
On the flip side, 18,400 could act as an immediate resistance zone and above it, the Nifty can retest the 20-day SMA placed at 18,550. In case of further upside, the index could move to 18,700, the expert said.
The options data shows that with the correction, the Nifty’s expected trading range has shifted lower to 18,100-18,500 for the near term.
On the options front, the maximum Call open interest was at 19,000 strike, followed by 18,700 strike, with Call writing at 18,300 strike then 18,400 strike.
The maximum put open interest was at 18,000 strike followed by 17,500 strike, with Put writing at 18,000 strike then 17,800 strike.
The volatility index India VIX was up by 2.48 percent from 13.73 to 14.07 levels. The VIX, which indicates the volatility expected over the next 30 days, went up for the second day.
Banking index
The Bank Nifty opened negative at 43,262 and moved in a zig-zag fashion. Selling pressure increased in the second half of the session and the index closed 279 points lower at 43,220, forming a long-legged Doji candle on the daily frame, which indicates indecisiveness among buyers and sellers about the market trend.
The banking index also snapped a 10-week winning streak and closed a percent lower for the week, forming a bearish candle on the weekly scale. If it stays below 43,500, weakness can extend to 43,000 and 42,750 levels, whereas hurdles are intact at 43,500 and 43,750 levels, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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