The Nifty wilted under another bout of selling to close below the psychologically vital 18,000 mark on December 23, as weak global cues, the resurgence of Covid and a spectre of more rate hikes by the US Federal Reserve haunted the market.
The Nifty opened lower at 17,977 and the downtrend continued, with the index sliding to the day’s low of 17,779. The index closed 320 points, or 1.77 percent, down at 17,807. For the week, the fall was 2.5 percent, the third successive week third that the index closed lower.
It formed a long bearish candle on the daily as well as weekly charts, indicating more weakness ahead. The index has lost more than 1,000 points from its record high of 18, 821.5 on December 1.
Given the back-to-back three bearish candles and lower high, lower low formation for the second consecutive session, experts expect more selling pressure.
“After a long time, the index closed below the 50-day SMA (simple moving average) and also formed a long bearish candle on weekly charts, which is broadly negative,” Amol Athawale, Deputy Vice President – Technical Research at Kotak Securities said.
As long as the index stays below 18,000, bears may tighten control, he said. The index can slip to 17,600-17,500.
On the flip side, 18,000 can act as a sacrosanct resistance zone, above which the index can move to 18,150-18,200, the market expert said.
As the correction entered the fourth day, the expected trading range shifted even lower to 17,600-18,100 from 18,000-18,500.
On the Options front, the maximum Call open interest was at 18,000 strike, the expected hurdle for the Nifty in the monthly expiry week, followed by 19,000 strike, with meaningful Call writing at 18,000 strike then 18,100 strike.
On the Put side, the maximum open interest was at 17,000 strike followed by 17,500 strike, with writing at 17,800 strike then 17,600 strike.
Volatility, which has been rising for the last few sessions, spiked near 16.5 during the day, reflecting weaker sentiment. India VIX, a gauge of volatility expected over the next 30 days, was up 6.4 percent from 15.19 to 16.16.
Banking index
The Bank Nifty opened 450 points down at 41,951 and fell to 41,600. It ended lower for the fourth consecutive session, down 741 points at 41,668.
It formed a bearish candle on the daily scale, with supports gradually shifting lower, making lower lows lower highs for the second straight session. Till it stays below 42,000, Bank Nifty can slip to 41,250 and 41,000, whereas on the upside, the resistance is at 42,000 and 42,250, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
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