The Nifty fell sharply for yet another session to close below 17,900 on January 6 on relentless selling by FIIs and mixed global cues.
The index opened higher at 18,008 but lost the gains in the initial hour itself and slipped to the day’s low of 17,795. It ended the day at 17,859, down 133 points.
The index formed a bearish candle and made lower high lower low for the third straight session. Experts said the market seemed to be oversold and if the index takes support at 17,800 in the coming sessions, it can easily reclaim the psychological 18,000 mark.
For the week, the index fell 1 percent, starting the new year on a negative note, and formed a bearish candlestick on the weekly frame by taking support at 17,800.
The index has seen a breakout of long upward sloping support trend line adjoining June 17 and December 26, 2022. If the index breaks the said support, it can slip to 17,700-17,500, experts said.
All sectoral indices, barring FMCG, closed in the red, with banking & financial services, technology, and metal stocks losing the most.
“On daily and intraday charts, the Nifty has formed lower top formation and it is consistently trading below the 50 and 20-day SMA (simple moving averages) which is broadly negative,” Amol Athawale, Deputy Vice President – Technical Research at Kotak Securities said.
The market, however, is in an oversold territory and there is a strong possibility of a quick pullback rally, he said.
For bulls, 18,000 would be the immediate hurdle followed by 18,100-18,175, but below it, the index can slip to 17,750, he said. A further correction can drag the index to 17,650.
On the options front, maximum Call open interest was at 18,000 strike followed by 18,100 strike with Call writing at 18,000 strike then 18,100 strike.
On the Put side, the maximum Put open interest was seen at 18,000 strike followed by 17,600 strike, with Put writing at 17,800 strike then 17,600 strike.
The data indicates a downward shift in trading range for the Nifty to 17,600-18,350 from 17,700-18,500.
The volatility index India VIX was up by 0.28 percent from 14.98 to 15.03 levels.
Banking index
The Bank Nifty opened positive at 42,650 but nosedived and broke its immediate support of 42,000 by falling to 41,877. The index closed 420 points down at 42,189 and formed a bearish candle on the daily scale, making lower lows from the last three sessions.
It formed a bearish candle on the weekly frame, too, but respected its previous week’s low. “Now till it holds below 42,500, weakness may be seen towards 41,750 and 41,500 levels, whereas hurdles are placed at 42,500 and 42,750 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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